Red Corporation,which Owns Stock in Blue Corporation,had Net Operating Income

question 109

Multiple Choice

Red Corporation,which owns stock in Blue Corporation,had net operating income of $200,000 for the year.Blue pays Red a dividend of $40,000.Red takes a dividends received deduction of $28,000.Which of the following statements is correct?

• A)Red owns 80% of Blue Corporation.
• B)Red owns 20% or more, but less than 80% of Blue Corporation.
• C)Red owns 80% or more of Blue Corporation.
• D)Red owns less than 20% of Blue Corporation.
• E)None of the above.