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Basic Question 1 of 13

The dividends-received deduction for corporations results in a ______ difference.

A. permanent
B. timing
C. temporary

User Contributed Comments 13

User Comment
kalps Becos dividends are received net of income taxes ??? or what ?
Gina i think because some dividends are not fully taxed, but count fully as income on the books.
Done By law corporations get a 70% deduction on dividends and have to pay the tax rate on the remainder (whatever that is). This is suppose to stimulate corporations' to buy ...From my series 7 books
ehc0791 Corp A has profit, pays dividends to share holder which happens to be another Corp B. Then B will be entitled for dividends-received deduction, ie, the dividends only shows on I/S, not tax return.
ConnieCher For tax purposes, depending on the percentage of stock ownership, a portion of dividends received by a corporation may not be taxable.
sanyukta how are foreign students supp to know how dividends are taxed!!
Crown01 Dividends received by your company, were paid by the other company. Those pay-out dividends had been taxed already in that company. Therefore no double taxed here.
magicchip different taxation rates due to gross up.
cfairs makes sense.. portion of dividends received not being taxable..
wundac portion of dividend is not taxable
Fotsta I agree with Crown01. That's the reason
peteSP div are deemed to have incurred a Tax deduction at source, / t% = gross div
kingirm Dividends are already taxed at the source company hence at parent company they are tax exempt in order to prevent double taxation
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Learning Outcome Statements

explain how deferred tax liabilities and assets are created and the factors that determine how a company's deferred tax liabilities and assets should be treated for the purposes of financial analysis

CFA® 2024 Level I Curriculum, Volume 3, Module 9.