Question

EXHIBIT 16-6 Stock Ownership and Dividends Received Deduction Percentage | Receiving Corporation's Stock Ownership in Distributing Corporation's Stock Less than 20 percent At least 20 percent but less than 80 percent 80 percent or more Dividends Received Deduction Percentage 50% 65 100 * To qualify for the 100 percent dividends received the receiving and distributing corporations must be in the same affiliated group as described in $1504. The 80 percent ownership requirement is the minimum ownership level required for inclusion in the same affiliated group.

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Answers are highlighted in yellow: Answered as per Year 2019 rules. Answers can be different if different tax is used: Solution: As per year 2019 rules, For less than 20% interest, DRD is 50%. For 20% to 80% interest, DRD is 65% DRD is limited to the Lesser of Applicable precentage on Taxable income or Applicable precentage on Dividends: a) DRD Lesser of (277500*50%) or (2970000-127000)*50% 138750 Marginal Tax rate [(277500-138750)*21%]/(277500) 10.5% c) DRD Lesser of (277500*65%) or (2970000-127000)*65% 180375 d) Marginal Tax rate [(277500-180375)*21%]/(277500) 7.4% e) DRD Lesser of (277500*100%) or (2970000-127000)*100% 277500 f) Marginal Tax rate [(277500-277500)*21%] / (277500) 0.0%