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Unformatted text preview: 3-1 High Corporation incorporates on May 1 andbegins business on May 10 of the current year.What alternative tax years can High elect toreport its initial year’s income?High Corporation has a few possibilities to use as its tax year. First High Corporation can use the calendar year which ends on December 31, however High Corporation could also choose a fiscal year more to their liking or that is more convenient for the type of business that they are conducting. A fiscal year can end on the last day of the month of any month of the year except December. An example fiscal year for High Corporation could be August 1, 2010 to September 30, 2011, whichever tax year that High Corporation decides to use their first year’s tax return will be a short period return unless High Corporation elects to go with the May 1, 2011 to April 30, 2012. 3-11 Why are corporations allowed a dividends received deduction? What dividends qualify forthis special deduction?Corporations are allowed a dividends-received deduction to help mitigate the effects of multiple taxation. Dividends that qualify for this deduction are; dividends received from a domestic corporation, corporations with less than 20% ownership can deduct up to 70% of the dividends received, if a corporation owned between 20% but less than 80% they can deduct up to 80% of dividends received however these percentages are subject to the limitation of taxable income before NOL, capital loss carryback, or DRD (Anderson, Pope, & Kramer, 2011)....
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This note was uploaded on 11/14/2011 for the course AC 430 AC 430-01 taught by Professor Riese during the Spring '11 term at Kaplan University.
- Spring '11