If a Local Firm X Owns 35% of the Shares

question 7

Multiple Choice

If a local Firm X owns 35% of the shares of a Canadian-owned Firm Y,and Y pays dividends to all of its shareholders,what percentage of the dividends received by X can be exempted from its taxable income?

• A)0%
• B)35%
• C)65%
• D)100%

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Definitions:

Future Event

An occurrence or situation that has not yet happened but is anticipated or expected to occur in the course of business or life.

Accounts Receivable

Amounts owed to a business by its customers for goods or services delivered on credit.

Revenue Recognition

A principle guiding how and when revenue is recognized in the accounting records, generally when earned and realizable.

Economic Substance

The underlying economic or commercial purpose of a transaction, which must exist for it to be recognized for tax or accounting purposes.