A Dividends Received Deduction (DRD) is a tax deduction available to corporations when they are paid dividends from another corporation.
This is a provision to reduce the number of times an amount of earnings can be taxed: company A, which is paying the dividend, will have already been taxed on it, and the shareholders of company B will be taxed as well, so the Dividends Received Deduction alleviates taxes at the intermediary stage when Company B receives it.
The Dividends Received Deduction reduces the amount of taxes due on dividends which have been paid to a corporation from another corporation, in situations where the payee owns dividend-eligible stock of the payor.
Corporate earnings are infamously double-taxed as it is: an owner of a corporation, for instance, will have to allow the earnings to be taxed at a corporate level and then again at a personal level when they are distributed in various ways, with few exceptions.
It is not uncommon for companies to own interest in another company, and the dividends from the shares owned are in danger of being triple-taxed without this deduction. If a company owns less than 20% of the company paying the dividends, it can deduct 70% of the amount of dividends received from its own taxes.
In situations were a company owns over 80% of the dividend paying company, as its subsidiary, 100% of the dividends can be deducted; this is because they will file consolidated returns and will be considered one entity for tax purposes.
If a company owns less than 80% but more than 20%, 80% of the dividend paid by the affiliated company will be deductible per the dividends received deduction.
Explore energy sector stocks with Tickeron, your key to understanding market trends, including bearish pennants, oversold stocks, and the use of EBIDA in analysis.
Equilibrium is where a price is stable because the supply and demand have balanced out. Disequilibrium is all the rest in trading
A support line represents an estimation of where a price is likely to stop moving downwards, based on recent data in technical analysis
You might not know it, but the Bond Market is about twice the size of the Stock Market. It's true: in the US and...
The simplest answer is: to make money! Owning shares of a company’s stock is known as taking a long position
Employers sponsoring 401(k) plans are required to give employees the information and ability to manage their own accounts
Lump Sum distributions can allow you to invest according to your preferences, but could also be spent in a short period
In general, Social Security Benefits will only be paid in cases where individuals paid into the system
There is no formal definition for what makes a company a blue-chip stock, but the general category includes some of...
Investors can use currency warrants as hedges against unfavorable movements in the exchange rate or public speculation