What does dividends-received deduction mean on the CPA exam?
Dividends-received deduction. A deduction that keeps corporate profit from being taxed three times as it passes between corporations. The percentage rises with the ownership stake.
Defined against Sec. 243.
Which CPA exam sections use dividends-received deduction?
Dividends-received deduction appears in the REG section of the CPA exam.
Related terms
- separately stated item: Income, deduction or credit that keeps its own character as it passes through to the owner, because the owner's own situation decides how it is taxed.
- standard deduction: A flat amount any taxpayer may subtract instead of itemizing.
- deferred tax liability: The deferred tax consequences of taxable temporary differences: income already in the books that the return has not taxed yet, or a deduction taken on the return ahead of the books.
- ordinary income: Income taxed at the regular graduated rates rather than at preferential capital gain rates.
- S corporation: A corporation that elects to be taxed like a partnership, so profit is taxed once in the shareholders' hands.