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Red Corporation, which owns stock in Blue Corporation, had net operating income of $200,000 for the year. Blue pays Red a dividend of $40,000. Red

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Red Corporation, which owns stock in Blue Corporation, had net operating income of $200,000 for the year. Blue pays Red a dividend of $40,000. Red takes a dividends received deduction of $28,000. Which of the following statements is correct? 17. Red owns less than 20% of Blue Corporation. b. Red owns 20% or more, but less than 80% of Blue Corporation. e, Red owns 80% of Blue Corporation. Red owns 80% or more of Blue Corporation. e. None of the above Eagle Corporation owns stock in Hawk Corporation and has taxable income of $160,000 for the year before considering the dividends received deduction. Hawk Corporation pays Eagle a dividend of S200,000, which was considered in calculating the $160,000. What amount of dividends received dedaction may Eagle claim if it owns 15% of Hawk's stock? a, $0. 18. b. $112,000 e. $140,000. d $160,000. e. None of the above 19. Orange Cormoration owns stock in White Corporation and has net operating income of $400,000 for the year. White Corporation pays Orange a dividend of S60,000. What amount of dividends received deduction may Orange claim if it owns l 5% of white stock (assuming Orange's dividends received deduction is not limited by its taxable income)? a S0. b. $42,000. c. $48,000. d. $60,000. e. None of the above 20. Which of the following statements is incorrect regarding the dividends received deduction? a. A corporation must hold stock for more than 45 days in order to qualify for a deduction with respect to dividends on such stock The taxable income limitation does not apply with respect to the 100% deduction available b. to members of an affiliated group. c. If purchase is financed 75% by debt, the deduction for dividends on such stock is a stock reduced by 75%. The taxable income limitation does not apply if ividends) results in a net operating loss for the corporation. d. the normal deduction (ie 70% or 80% of e. None of the above

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