Dividends-received deduction

A corporate tax deduction on income allowed by company A that is in ownership of shares of company B and receives <> on the shares of company B.

Dividends-Received Deduction

A reduction in the taxable income of a company when it receives dividends from stock it owns in another company. A company is eligible for a 70% dividends-received deduction if it owns less than 20% of the second company, 80% if it owns between 20% and 80% of the company, and 100% if it owns more than that. A dividends-received deduction exists in order to reduce the effects of triple taxation on publicly-traded companies; that is, the company must pay corporate taxes and its shareholders must pay capital gains taxes. The dividends-received deduction allows companies to mostly avoid a third tax on the same earnings.
References in periodicals archive ?
For shareholders that are corporations, Redwood's dividend distributions are not generally eligible for the corporate dividends-received deduction.
Economic Reality Problem With the Dividends-Received Deduction
To that end it passed IRC section 246A, which prevents corporations from claiming a dividends-received deduction against dividends from stock purchased using debt that generates an interest expense deduction.
These rules are quite harsh, and may have serious adverse consequences for taxpayers that filled their base period amounts with high-taxed CFC dividends, while claiming the section 965 dividends-received deduction (DRD) with respect to low-taxed dividends.
To address this, the AJCA creates an 85% temporary dividends-received deduction (TDRD) for dividends paid to U.
The exceptions also extend to relationships that provide for 100% of dividends-received deduction and the 80% dividend-received deduction allowed when the taxpayer owns 20% of the outstanding stock of the investee.
The surge in financial innovation that occurred during the 1980s produced a family of securities that were designed to lower the cost of preferred stock financing by widening the availability of the Internal Revenue Code Section 246(c) dividends-received deduction.
Illinois Court Rejects Dividends-Received Deduction
For stockholders that are corporations, Anworth's dividends are not eligible for the corporate dividends-received deduction.
The AJCA sets out the various requirements to be met in order to qualify under the Homeland Relief mechanism, so that an 85-percent dividends-received deduction can be obtained on repatriation of funds to the United States.