dividend exclusion

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 ?
pared-down dividend exclusion coupled with several corporate tax
Under the Budget Act, the 60% dividend exclusion for dividends received by captive real estate investment trusts (REIT) and regulated investment companies (RIC) will be eliminated over a five-year period for banks with assets in excess of $8 billion.
Olson discussed the tax legislative agenda for 2003 and fielded questions on topics ranging from the Administration's dividend exclusion provision to international issues.
In 1992, the Treasury estimated that dividend exclusion integration would trim corporate receipts by about fifteen percent, or $19 billion in today's dollars.
The Section 34 credit was repealed in 1964 when the maximum dividend exclusion was doubled to $100.
While the stated objective by Congress for its previous elimination of the provision in 1986 was to simplify the tax law, our members never viewed the previous interest and dividend exclusion as being a complex measure.
The dividend exclusion method, which has been considered often, would tax all income at the corporate level but would permit taxpayers to exclude dividend income from their taxable income.
Of these, the study favored adopting a comprehensive business income tax (CBIT) or using the dividend exclusion method.
Exhibit 1 demonstrates the extent to which the reduction in both corporate tax rates and the dividend exclusion reduced the tax advantages of holding auction rate preferred as a substitute for taxable money market investments.
taxation, nor would the shareholders when Subpart F inclusions arose or when actual dividends paid (because of the dividend exclusion from UBTI).
Two provisions of ERTA increased tax liabilities: repeal of the combined interest and dividend exclusion and reduction of the threshold above which a portion of unemployment insurance benefits are included in gross income.