Chapters 2 & 4 Study Question
EXAMPLE EXAM QUESTIONS
Jupiter Corporation received a $100,000 dividend from Pluto Corporation.
owns 75% of Pluto Corporation, may take a dividends received deduction of $80,000.
The allowable dividends received deduction for a corporation that owns 20% or
more but less than 80% of the dividend-paying corporation is 80%.
Jupiter can take a dividends received deduction of $80,000.
Intergalactic Corporation, a personal service corporation, had $50,000 of active income,
$90,000 of portfolio income, and a $160,000 passive loss during the year.
How much of
the passive loss is deductible?
None of the above.
A personal service corporation may not offset passive loss against active income
or portfolio income.
We didn’t cover this directly in the lecture, but it is a good
thing to know that a personal service corporation is treated similar to an
individual such that the Company is not allowed to offset passive losses against
active income – just like an individual.
Gemini Corporation, which owns stock in Pisces Corporation, had net operating income
of $200,000 for the year.
Pisces pays Gemini a dividend of $80,000.
Gemini takes a
dividends received deduction of $56,000.
Which of the following statements is correct?
Gemini owns less than 20% of Pisces Corporation.
Gemini owns 20% or more, but less than 80% of Pisces Corporation.
Gemini owns 80% of Pisces Corporation.