Federal Taxation

Chapter 14 24.What is the character of the dividends-received subtraction? What stacks are clothe to claim this impose write-off? What dividends discard for this deduction? The purpose of dividends-received deduction is to prevent double taxation of earnings. The Dividend Received Reduction (DRD) is the innovation where a corporation receiving a dividend from another corporation does not have to earnings taxes on that dividend they received. For example, smart set A coordinate requital taxes on income earned(first taxed) and if it distributes any of this income to company B which is shareholder, so company B will include this as a part of their income and will have to include this in nonexempt income (second taxed), then dedicate dividend to its shareholder where this dividend would taxed(third tax). To avoid triple tax the government result domestic corporations to take a DRD base on their character ownership. A percentage ownership of little than 20% is allowed a DRD of 70%;a company which owns 20% and less than 80%, receives a DRD of 80% and a company which has ownership of 80% or more receives a DRD of atomic number 6%. Personal inspection and repair corporations, personal holding companies and S corporations are not qualified for DRD. Domestic corporation who brook corporate income taxes are entitled to claim this deduction.

It is the dividends received by a corporation that qualify for this deduction, since the corporation would further pay dividend which would create triple taxation. 51.What is the purpose of the reconciliation of taxable income wi th allow income? Book income will dissent ! from taxable income because hand income must follow US generally accepted accounting principles rules. so there will be items included in book income that will not be included in taxable income. For example interest received on declare and municipal obligations, is not taxable but is included as tax revenue for book income. This must be excluded for calculation of taxable income. as well as there are expenses such as life-insurance premiums that would be an...If you call for to get a full essay, order it on our website: BestEssayCheap.com

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