Join the waitlist

Dividends Received Deduction Calculator (50, 65 and 100 Percent)

What do these figures come to once the work is shown?

Corporate dividends received deduction by ownership tier with the section 246(b) taxable income limits applied in the statute order.

  • Runs in your browser
  • Nothing stored or sent
  • Free, no sign-up
Your figures
Example figuresIllustrative only. Type over them with your own.
Dividends received deduction
$345,000
Total of the three tiers after the taxable income limits
Under 20% owned (50%)
$100,000
Before limit: 100000
20% owned (65%)
$195,000
Before limit: 195000
Drawn to one scale
Dividends received deduction$345,000
Under 20% owned (50%)$100,000
20% owned (65%)$195,000
Affiliated group (100%)$50,000
Total dividends$550,000
All results
MeasureResult
Dividends received deduction$345,000
Under 20% owned (50%)
Before limit: 100000
$100,000
20% owned (65%)
Before limit: 195000
$195,000
Affiliated group (100%)$50,000
Total dividends$550,000
How this was worked out
Work shownrecomputed as you type
Tier amounts: 50% of dividends under 20% owned, 65% of dividends from 20% owned, 100% for qualifying affiliated dividends
Limit on 65% tier = 65% x taxable income
Limit on 50% tier = 50% x (taxable income - dividends from 20% owned corporations)
No limit when the year has a net operating loss, including one the full deduction creates; the 100% tier is not limited

Illustrative arithmetic on the figures you enter. Check the result against your firm's methodology before relying on it.

The formulas

  • Tier amounts: 50% of dividends under 20% owned, 65% of dividends from 20% owned, 100% for qualifying affiliated dividends
  • Limit on 65% tier = 65% x taxable income
  • Limit on 50% tier = 50% x (taxable income - dividends from 20% owned corporations)
  • No limit when the year has a net operating loss, including one the full deduction creates; the 100% tier is not limited

How it works

Section 243 gives a corporation a deduction for dividends received from a domestic corporation: 50 percent in general, 65 percent when the payer is 20 percent owned by vote and value, and 100 percent for qualifying dividends within an affiliated group.

Section 246(b) caps the 50 and 65 percent deductions by a percentage of taxable income. The cap is applied first to the 20 percent owned dividends at 65 percent, then to the others at 50 percent of taxable income reduced by the 20 percent owned dividends. A year with a net operating loss has no cap, including a loss created by the full deduction under section 246(b)(2). Holding period rules, debt-financed stock and the small business investment company rule are not modeled.

Illustrative figures only. Check the result against your firm's methodology before relying on it.

Common questions

When does the 100 percent deduction apply?

For qualifying dividends between members of the same affiliated group that meet section 243(b).

Which taxable income do I enter?

The figure computed without the deductions under sections 172, 199A, 243(a)(1), 245(a) and (b) and 250, without any section 1059 adjustment and without capital loss carrybacks, as section 246(b)(1) directs.

What counts as 20 percent owned?

A corporation of which you own 20 percent or more of the stock by vote and value.

Sources

Runs in your browser. The figures you type are not sent to CORAA or stored. Check the result against your firm's methodology before relying on it.

Related audit calculators

CalculatorQSBS Section 1202 Exclusion Calculator (50, 75, 100 Percent Tiers)Excluded gain on qualified small business stock by holding period, with the $15 million or 10 times basis cap and the $75 million gross asset check.CalculatorSection 1031 Exchange Boot, Recognized Gain and Basis CalculatorRealized gain, boot from cash and net debt relief, recognized gain, deferred gain and the basis of the replacement real property.CalculatorInstallment Sale Gross Profit Percentage Calculator (Section 453)Gross profit percentage, gain reported each year as payments arrive, and recapture income recognized in the year of sale.
For US CPA firms

Join the CORAA waitlist

CORAA AI drafts audit working papers from your client’s QuickBooks books and does the first pass: lead schedules, tie-out, memos, draft notes and letters. CORAA Network reviewers clear every finding. Your firm reviews and signs.

  • First audit free, so you can judge the quality on a real file
  • Flat fee by entity size; messy books included
  • We work only with CPA firms, never their clients
See how it works →

* required