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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.
d. Personal service
No Personal holding
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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- The Land, Taxation in the United States, Educational Development Corp, Type1 M/C, Corr Ans