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Choices a b and c are incorrect per the above rule

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Unformatted text preview: 00 or more. Choices "a", "b", and "d" are incorrect, per the above rule. CPA-02237 Type1 M/C 116. CPA-02237 A-D Nov 91 II #43 Corr Ans: A PM#22 R 3-99 Page 24 Which of the following entities must include in gross income 100% of dividends received from unrelated taxable domestic corporations in computing regular taxable income? a. b. c. d. Personal service corporations Yes No Yes No Personal holding companies Yes No No Yes CPA-02237 Explanation Choice "a" is correct. Both a personal service corporation and a personal holding company must include 100% of the dividends received from unrelated taxable domestic corporations in gross income in computing regular taxable income. Rule: Dividends are fully includible in gross income. However, a corporation is generally entitled to a special deduction from gross income for dividends received from a domestic corporation that is subject to income tax. This deduction is (1) 70% of dividends received from corporations owned less than 20% by the recipient corporation; (2) 80% of dividends rece...
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