Which of the Following Statements Is Incorrect Regarding the Dividends

question 100

Multiple Choice

Which of the following statements is incorrect regarding the dividends received deduction?

• A) A corporation must hold stock for more than 90 days in order to qualify for a deduction with respect to dividends on such stock.
• B) The taxable income limitation does not apply with respect to the 100% deduction available to members of an affiliated group.
• C) If a stock purchase is financed 75% by debt, the deduction for dividends on such stock is reduced by 75%.
• D) The taxable income limitation does not apply if the normal deduction (i.e., 50% or 65% of dividends) results in a net operating loss for the corporation.
• E) None of the above.

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Definitions:

Keynesian Models

Economic theories that emphasize the total spending in the economy and its effects on output and inflation, developed by John Maynard Keynes.

Planned Investment

Expenditures that businesses intend to make in the future for new capital assets, such as buildings and machinery, to increase production capabilities.

Great Depression

A severe worldwide economic downturn that took place during the 1930s, marked by high unemployment, deflation, and a drop in global GDP.

Aggregate Demand

Total requisites for goods and services across an economic landscape, determined at a steady general price level over a fixed time frame.