Choice "B" is correct. The $10,000 dividend is from an unrelated corporation. This means less than 20% of the company is owned. A 70% dividends received deduction is available. Taxable income | $ 70,000 | Less: Dividends received deduction (70% × 10,000) | (7,000) | Taxable income | $ 63,000 | | | Income tax | | 15% × $50,000 | $ 7,500 | + [25% × ($63,000 − $50,000)] | 3,250 | Total | $ 10,750 |
Choices "d", "a", and "c" are incorrect. The $10,000 dividend is from an unrelated corporation. [This means less than 20% of the company is owned. A 70% dividends received deduction is available.]
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