Acct 553 Week 5

1133 Words Apr 5th, 2013 5 Pages
14-24.
What is the purpose of the dividends received deduction? What corporations are entitled to claim this deduction? What dividends qualify for this deduction?
The purpose of dividends-received deduction is to prevent triple taxation of earnings. The Dividend Received Reduction (DRD) is the concept where a corporation receiving a dividend from another corporation does not have to pay taxes on that dividend they received.
Code Sec243 of the IRS provide relief to domestic corporations, when paying dividends to its shareholders, which is subject to tax. In another words, the relief is the paid dividend to others corporations, in which the income would be tax a third time after the recipient corporation pays dividend to its
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Type G: Transfer
Type G reorganizations involve bankruptcy by permitting the transfer of all or some of a failing company 's assets to a new corporation.

17-24.
Define and differentiate a spin-off, split-off, and split-up.
Split-up: An arrangement whereby a parent corporation transfers all of its assets to two or more corporations and then winds up its affairs. When a split-up occurs, the shareholders of the parent corporation surrender the total amount of their stock in exchange for stock in the transferee corporation.
Split-Off: The process whereby a parent corporation organizes a subsidiary corporation to which it transfers part of its assets in exchange for all of the subsidiary 's capital stock, which is subsequently transferred to the shareholders of the parent corporation in exchange for a portion of their parent stock. A split-off differs from a spin-off in that the shareholders in a split-off must relinquish their shares of stock in the parent corporation in order to receive shares of the subsidiary corporation whereas the shareholders in a spin-off need not do so.
Spin-Off: The situation that arises when a parent corporation

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