Porto Corporation received $50,000 of dividend income from Seville, Inc. Porto owns 5 percent of the outstanding stock of Seville. Porto’s marginal tax rate is 21 percent. Assume both companies are U.S. corporations.

a. Calculate Porto’s allowable dividends-received deduction and its after-tax cash flow as a result of the dividend from Seville.

b. How would your answers to part (a) change if Porto owned 55 percent of the stock of Seville?

c. How would your answers to part (a) change if Porto owned 85 percent of the stock of Seville?