Corporation A receives a dividend from Corporation B. It includes the dividend in gross income for tax purposes
but includes a pro-rata portion of B’s earnings in its financial accounting income. If A has accounted for the dividend correctly (using the general rule), how much of B’s stock does A own?
- A owns less than 20 percent of the stock of B.
- A owns more than 50 percent of the stock of B.
- Cannot be determined.
- A owns at least 20 but not more than 50 percent of the stock of B.