Why are corporations allowed a dividends-received deduction? What dividends qualify for this special deduction?

A. Corporations are allowed a dividends-received deduction to partially or fully mitigate the effects of multiple taxation of corporate earnings. Dividends received by a domestic corporation from another domestic corporation (other than S corporations) qualify for the special 70%, 80%, or 100% deduction. Distributions that receive capital gain treatment, most dividends from foreign corporations, dividends on stock held 45 days or less, and dividends on debt financed stock are not eligible.

B. Corporations are allowed a dividends-received deduction to prevent abuse in situations where a corporation is closely held. Dividends received by a domestic corporation from another domestic corporation (other than S corporations) qualify for the special 70%, 80%, or 100% deduction. Distributions that receive capital gain treatment, most dividends from foreign corporations, dividends on stock held 45 days or less, and dividends on debt financed stock are not eligible.

C. Corporations are allowed a dividends-received deduction to prevent abuse in situations where a corporation is closely held. Dividends received by a domestic corporation from another domestic corporation (other than S corporations) qualify for the special 60%, 70%, or 80% deduction. Distributions that receive capital gain treatment, most dividends from foreign corporations, dividends on stock held 45 days or less, and dividends on debt financed stock are eligible.

D. Corporations are allowed a dividends-received deduction to partially or fully mitigate the effects of multiple taxation of corporate earnings. Dividends received by a domestic corporation from another domestic corporation (other than S corporations) qualify for the special 60%, 70%, or 80% deduction. Distributions that receive capital gain treatment, most dividends from foreign corporations, dividends on stock held 45 days or less, and dividends on debt financed stock are eligible.