Riverbend Inc. received a $410,000 dividend from stock it held in Hobble Corporation. Riverbend's taxable income is $2,520,000 before deducting the dividends-received deduction (DRD), a $83,000 NOL carryover, and a $181,000 charitable contribution.
Taxable Income Tax
< $50,000 15% of the taxable income
$50,000 - $75,000 $7,500 + 25% of taxable income over $50,000
$75,000 - $100,000 $13,750 + 34% of taxable income over $75,000
$100,000- $335,000 $22,250 + 39% Of taxable Income over $100,000
$335,000- $10,000,000 $113,900 + 34% of taxable income over $335,000
$10,000,000- $15,000,000 $3,400,00 + 35% of taxable income over
$15,000,000- $18,333,333 $5,150,000 + of taxable income over
Over $18,333,333 35% of the taxable income
Required:
a. What is Riverbend’s deductible DRD assuming it owns 11 percent of Hobble Corporation?
b. Assuming the facts in part (a), what is Riverbend’s marginal tax rate on the dividend?
c. What is Riverbend’s DRD assuming it owns 36 percent of Hobble Corporation?
d. Assuming the facts in part (c), what is Riverbend’s marginal tax rate on the dividend?
e. What is Riverbend’s DRD assuming it owns 89 percent of Hobble Corporation (and is part of the same affiliated group)?
f. Assuming the facts in part (e), what is Riverbend’s marginal tax rate on the dividend?
Answers: 2
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Riverbend Inc. received a $410,000 dividend from stock it held in Hobble Corporation. Riverbend's ta...
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