Orange Corporation Owns Stock in White Corporation and Has Net

question 99

Multiple Choice

Orange Corporation owns stock in White Corporation and has net operating income of $800,000 for the year.White Corporation pays Orange a dividend of $300,000.What amount of dividends received deduction may Orange claim if it owns 18% of White stock (assuming Orange's dividends received deduction is not limited by its taxable income) ?

• A)$0.
• B)$210,000.
• C)$240,000.
• D)$300,000.
• E)None of the above.

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Definitions:

Preferred Stock

A type of stock that provides a specific dividend that is paid before any dividends are paid to common stockholders, often with no voting rights.

Zero Growth

refers to a situation where a company or economy is not experiencing any increase in its output, sales, or other financial indicators over a period.

Cumulative Dividend

A feature of preferred stock that mandates the payment of any missed dividends before dividends can be distributed to other shareholders.