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The dividends received deduction (DRD) is a federal tax deduction in the United States that is given to certain corporations that get dividends from related entities.
Dividends-Received Deduction. A corporation can deduct a percentage of certain dividends received during its tax year. This section discusses the general rules that apply. The deduction is figured on Form 1120, Schedule C, or the applicable schedule of your income tax return.
(a) General rule In the case of a corporation, there shall be allowed as a deduction an amount equal to the following percentages of the amount received as dividends from a domestic corporation which is subject to taxation under this chapter:
The Dividends Received Deduction (DRD) is a tax break available to domestic C corporations (C-corps) that own stock in other domestic corporations and receive dividends from them. The DRD’s main purpose is to protect corporations from being subject to triple taxation.
The dividends received deduction (DRD) is a U.S. federal corporate tax deduction. It allows corporations to deduct a portion of the dividend income they receive from a related entity on their...
The Dividends Received Deduction, or DRD, is a tax deduction that C corporations receive on the dividends distributed to them by other companies whose stock they own. As a C corporation’s equity interest in a dividend-paying company increases, so does the amount of the DRD as shown below:
The dividends-received deduction[1] (or " DRD "), under U.S. federal income tax law, is a tax deduction received by a corporation on the dividends it receives from other corporations in which it has an ownership stake. Impact. This deduction is designed to reduce the consequences of alleged triple taxation. [2] .