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Lecture: Regulation 3 E.
Choice "B" is correct. $1,000. Ral Corp. owned 5% of Sol Corp.'s stock. This ownership interest
would normally entitle Ral to a 70% dividends received deduction (since it owned less than 20% of Sol's
stock). However, in order to qualify for the dividends received deduction, the corporate shareholder, Ral,
must have owned the investee corporation's stock, Sol Corp., for at least 45 days. In this case, Ral
owned Sol's stock from 12/1/93 through 1/10/94 (less than 45 days). Consequently, Ral does not qualify
for the dividends received deduction and the entire $1,000 dividend must be included in Ral's income. CPA-04373 Type1 M/C 145. CPA-04373 A-R Corr Ans: F PII May 92 #5 (Adapted) 10 PM#51 R 3-99 Page 3 Following is Ral Corp.'s condensed income statement, before federal income tax, for the year ended
December 31, 1993:
Cost of sales
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This note was uploaded on 06/14/2013 for the course ACCOUNTING Regulation taught by Professor Becker during the Fall '10 term at Keller Graduate School of Management.
- Fall '10
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