Marmot Corporation pays a dividend of $100,000 in the current year. Otter Corporation, a calendar year C corporation, owns 15% of Marmot's stock. Gerald, an individual taxpayer in the 24% marginal bracket, also owns 15% of Marmot's stock. Compare and contrast the treatment of the dividend by Otter Corporation and Gerald. Use the attached dividend deduction. a. Otter Corporation will be allowed a dividends received deduction equal to 50% of the dividends it received. It will pay tax of fill in the blank % on the remaining portion of the dividends.
Marmot Corporation pays a dividend of $100,000 in the current year. Otter Corporation, a calendar year C corporation, owns 15% of Marmot's stock. Gerald, an individual taxpayer in the 24% marginal bracket, also owns 15% of Marmot's stock. Compare and contrast the treatment of the dividend by Otter Corporation and Gerald. Use the attached dividend deduction. a. Otter Corporation will be allowed a dividends received deduction equal to 50% of the dividends it received. It will pay tax of fill in the blank % on the remaining portion of the dividends.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Discussion Question 17-11 (LO. 2)
Marmot Corporation pays a dividend of $100,000 in the current year. Otter Corporation, a calendar year C corporation, owns 15% of Marmot's stock. Gerald, an individual taxpayer in the 24% marginal bracket, also owns 15% of Marmot's stock.
Compare and contrast the treatment of the dividend by Otter Corporation and Gerald.
Use the attached dividend deduction.
a. Otter Corporation will be allowed a dividends received deduction equal to 50% of the dividends it received. It will pay tax of fill in the blank % on the remaining portion of the dividends.
Transcribed Image Text:EXHIBIT 17.2
Dividends Received Deduction
Percentage of Ownership by
Corporate Shareholder
Deduction
Percentage
Less than 20%
50%
20% or more (but less than 80%)
65%
80% or more"
100%
*The payor corporation must be a member of an affiliated group with the recipient corporation.
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