In the Current Year, Red Corporation (A Calendar Year C

question 111

Multiple Choice

In the current year, Red Corporation (a calendar year C 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 $20,000. 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 these.