a. What is Riverbend’s deductible DRD assuming it owns 10 percent of Hobble Corporation?
b. Assuming the facts in part (a), what is Riverbend’s marginal tax rate on the dividend?
c. What is Riverbend’s DRD assuming it owns 58 percent of Hobble Corporation?
d. Assuming the facts in part (c), what is Riverbend’s marginal tax rate on the dividend?
e. What is Riverbend’s DRD assuming it owns 94 percent of Hobble Corporation (and is part of the same affiliated group)?
f. Assuming the facts in part (e), what is Riverbend’s marginal tax rate on the dividend?
EXHIBIT 16-6 Stock Ownership and Dividends Received Deduction Percentage
|Receiving Corporation’s Stock Ownership in Distributing Corporation’s Stock||Dividends Received Deduction Percentage|
|Less than 20 percent||50%|
|At least 20 percent but less than 80 percent||65|
|80 percent or more*||100|
* To qualify for the 100 percent dividends received, the receiving and distributing corporations must be in the same affiliated group as described in §1504. The 80 percent ownership requirement is the minimum ownership level required for inclusion in the same affiliated group.Get Accounting Homework Help Today