Why would a corporation purchase the stock of another corporation?

A) To prevent double taxation of its shareholders
B) Because dividends received by a corporation are partially tax exempt
C) It is equivalent to a tax carried forward
D) It is equivalent to a tax carried back

Question

Cameron Klingener · Accepted Answer

Final Answer : B, Explanation :  When a corporation purchases the stock of another corporation, it can receive dividends that are partially tax exempt. This is because of the dividends received deduction, which allows corporations to deduct a portion of dividends received from other corporations. This can be a beneficial investment strategy for corporations looking to increase their income and tax savings.

Why would a corporation purchase the stock of another corporation?

A) To prevent double taxation of its shareholders
B) Because dividends received by a corporation are partially tax exempt
C) It is equivalent to a tax carried forward
D) It is equivalent to a tax carried back

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Learning Objectives

Related questions

Why would a corporation purchase the stock of another corporation?A) To prevent double taxation of its shareholdersB) Because dividends received by a corporation are partially tax exemptC) It is equivalent to a tax carried forwardD) It is equivalent to a tax carried back

Definitions

Learning Objectives

Learning Objectives

Related questions

Why would a corporation purchase the stock of another corporation?

A) To prevent double taxation of its shareholders
B) Because dividends received by a corporation are partially tax exempt
C) It is equivalent to a tax carried forward
D) It is equivalent to a tax carried back