A Deemed Paid Credit Is Available on Which of the Following

question 11

Multiple Choice

A deemed paid credit is available on which of the following dividends received by a U.S. corporation?

• A) Dividend received from a 5 percent owned foreign corporation, all of the income of which is derived from an active business.
• B) Dividend received from a 20 percent owned foreign corporation, all of the income of which is derived from an active business.
• C) Dividend received from a 100 percent owned foreign corporation, all of the income of which is derived from an active business.
• D) Both dividend received from a 20 percent owned foreign corporation, all of the income of which is derived from an active business and dividend received from a 100 percent owned foreign corporation, all of the income of which is derived from an active business are correct answers.

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Definitions:

Fixed Overhead

This term refers to indirect costs of running a business that do not change with the level of production or sales, such as rent, utilities, and salaries.

Variable Overhead Rate

The ratio of variable overhead costs to activity drivers such as hours worked or units produced.

Actual Production

The actual quantity of goods or services produced over a specific period, often compared to planned or theoretical production levels.

Favorable Volume Variances

Differences between planned and actual production volumes that result in lower costs or higher profits.