Falcon Ltd
Subject:LawPrice:6.89 Bought3
Falcon Ltd. received the following dividends during the year for its December 31, 2019 taxation year:
Dividend from a corporation A in which Falcon Ltd has a 5% interest $150,000
Dividend from a wholly owned subsidiary corporation B $90,000
Dividend from a wholly owned subsidiary corporation C $60,000
Further Information:
Corporation B received a $20,000 dividend refund as a result of paying the above dividend.
Corporation C received no dividend refund as a result of paying the above dividend.
What is the minimum Part IV tax which Falcon Ltd will have to report for December 31, 2019?
1) $77,500
2) $99,600
3) $115,000
4) $80,000
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The minimum Part IV tax which Falcon Ltd will have to report for December 31, 2019
$77,000
The dividends from a 5% owned subsidiary A are taxed in full.
The dividends from subsidiary B are taxed less the $20,000 refund.
THe dividends from subsidiary C are taxed in full.
The total taxable dividends for Falcon Ltd are $150,000 + $70,000 + $60,000 = $280,000
The corporate tax rate is 27.5%. The tax to be paid will be 27.5%*$280,000 = $77,000
