There should be a 50% special deduction for dividends, since the ownership right is only 1% and that is less than 20%.
Gross income = Regular income + Dividend income
= 1,000 + 1,000
= 2,000
Special deduction = Dividend income × 50%
= 1,000 × 50%
= 500
Taxable income = Gross income – Special deduction
= 2,000 – 500
= 1,500
Answer: C
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