Answer:
The dividends received deduction <u>for Kaspar Corporation is $70,000</u>, while the dividends received deduction f<u>or Ludger Corporation is $230,000</u>.
Explanation:
Note that the data in the question are merged together but they are first sorted in the attached excel file before answering the question as follows:
The dividends received deduction refers a federal tax deduction that are enjoyed in the U.S. by some corporations that receives dividends from related entities.
Based on the general rule for dividends received deduction, if the ownership by the company receiving the dividend in the company paying the dividend is less than 20%, the dividends received deduction is the 70% of the dividend received.
Since both Kaspar and Ludger have just 15% ownership which is less than 20% in domestic corporation from which they received dividends, their dividends received deduction can therefore be determined using the following formula:
Dividend received deduction = Dividend received * 70% .............. (1)
Using equation (1), we have:
Kaspar's dividend received deduction = $100,000 * 70% = $70,000
Ludger's dividend received deduction = $230,000 * 70% = $161,000
Therefore, the dividends received deduction for Kaspar Corporation is $70,000, while the dividends received deduction for Ludger Corporation is $230,000.
