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CH2+4+Q++s - Chapters 2 4 Study Question EXAMPLE EXAM...

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Chapters 2 & 4 Study Question EXAMPLE EXAM QUESTIONS ____1. Jupiter Corporation received a $100,000 dividend from Pluto Corporation. Jupiter, which owns 75% of Pluto Corporation, may take a dividends received deduction of $80,000. T The allowable dividends received deduction for a corporation that owns 20% or more but less than 80% of the dividend-paying corporation is 80%. Therefore, Jupiter can take a dividends received deduction of $80,000. 2. 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? a. $0. b. $50,000. c. $90,000. d. $160,000. e. None of the above. a 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. 3. 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?
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