dividend exclusion

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Dividend Exclusion

The percentage of received dividends that a corporation may exclude from its taxable income. That is, a company may deduct a certain amount of dividends received from its investments. When a corporation owns less than one-fifth of another company's shares outstanding, it may deduct 70% of dividends. When it owns less than 80% of the company, it may deduct 75%. When it owns more than 80% of the other company, it may deduct all dividends. Dividend exclusion helps avoid double taxation, but is not available to any individual investor.

dividend exclusion

For corporate stockholders, the dividends received that are exempt from taxation. A corporation that owns less than 20% of the stock in another company can exclude 70% of the dividends received from taxable income. When between 20% and 79% of the stock of another company is owned, 75% of the dividends received from that firm can be excluded from taxation. When 80% or more of another company's stock is owned, all of the dividends received from that firm can be excluded from taxation. Dividend exclusion is not applicable to individual investors.
References in periodicals archive ?
Some of these states adopted their own tax rules for dividend exclusions while others deny any exclusion for dividend income.
As the Federal tax laws require the inclusion of foreign dividends in taxable income and do not provide for any dividend exclusion, 100% of the dividends received from foreign subsidiaries are included in the taxable income of a U.
Depending upon interpretation of the law, only interest expense in excess of the dividend exclusion may be deductible for tax purposes.