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3. A C corporation is allowed an ordinary and necessary deduction for dividends paid to shareholders. 4. In many situation
TRUE OR FALSE?
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Answer #1

Hi,

Answer to point no. 3 is False. Dividend paid to shareholders is distribution of profit and not business expenditure. First the profit is taxed and then remainder of profit i.e. Profit after tax (PAT) is distributed as dividend hence dividend paid to shareholders is not allowed as deduction to a "C" corporation.

Answer to point no. 4 is also False. Dividend Received Deduction is given to certain corporations which receive dividend from other corporations which are related entities. Though DRD ranges from 70% to 100%, it requires certain conditions to fulfilled to qualify for the same.

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