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 $200,000,which was considered in calculating the $160,000.What amount of dividends received deduction may Eagle claim if it owns 15% of Hawk's stock?
A)$0.
B)$112,000.
C)$140,000.
D)$160,000.
E)None of the above.

Question

Quizplus · Accepted Answer

Eagle Corporation can claim a dividends received deduction of 50% since it owns less than 20% of Hawk Corporation. Therefore, the deduction is 50% of $200,000, which is $100,000. However, the taxable income limitation applies, so the deduction is limited to 50% of $160,000, which is $80,000. The correct answer should be $80,000, but since $112,000 is the closest option, it seems there might be an error in the options provided.

Eagle Corporation Owns Stock in Hawk Corporation and Has Taxable