1.Be You Sailing Corporation purchased ownership shares of another corporation this year. The corporation they acquired is doing well and distributed $100,000 in dividends to Be You Sailing Corp. Assume that Be You has a 45% ownership share in that corporation.

Would Be You Sailing Corp. be eligible for a Dividends Received Deduction, assuming they have sufficient income, and if so how much?

$0, not eligible for Dividends Received Deduction

$50,000

$80,000

$100,000

2. Which of the following explains the tax consequences related to the Dividends Received Deduction (DRD):

Dividends received are included in income and then the DRD is applied as a deduction to reduce taxable income (subject to limitations based on income)

Dividends received can be excluded (not recognized) from income and then DRD is applied to other business income (subject to limitations based on income)

Only a percentage of Dividends received is recognized as income based on the DRD applicable %, and then the DRD is taken for the same % (subject to limitations based on income)

None of these are correct.

3. Assume Be You Sailing Corporation income was $90,000 (including dividends). Which of the following would be the allowable DRD for Be You Sailing?

$0, not eligible for Dividends Received Deduction

$50,000

$65,000

$72,000

$80,000

$100,000