Which of the Following Statements Is Incorrect Regarding the Dividends

question 77

Multiple Choice

Which of the following statements is incorrect regarding the dividends received deduction?

• A)A corporation must hold stock for more than 90 days in order to qualify for a deduction with respect to dividends on such stock.
• B)The taxable income limitation does not apply with respect to the 100% deduction available to members of an affiliated group.
• C)If a stock purchase is financed 75% by debt, the deduction for dividends on such stock is reduced by 75%.
• D)The taxable income limitation does not apply if the normal deduction (i.e., 70% or 80% of dividends) results in a net operating loss for the corporation.
• E)None of the above.

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Definitions:

Price Taker

A market participant that accepts the prevailing market prices and lacks the influence to change prices for goods or services.

Market Price

The ongoing rate at which a service or an asset is offered for buying or selling in a certain market.

Level Of Production

The quantity of goods or services produced within a given period by a company, industry, or country.

Market Equilibrium Price

The price at which the quantity of goods supplied equals the quantity of goods demanded in a market.