Lesson 2B-Objectives

After completing this lesson, students should be able to:

1.	Compute tax for members of controlled groups of corporations in light of the availability of only one set of lower rate brackets for the group.

2.	Describe the purpose of the dividend received deduction, know when the 70%, 80% and 100% DRD is available, and the limitations to which it is subject.

3.	Describe the reason Section 1059 is in the code and when a dividend is “extraordinary.”

4.	Know when section 1059 applies and compute a shareholder’s tax on a dividend and stock sale when it does.

5.	Describe how the computation of tax for members of a controlled group of corporations is affected by inter-corporate dividends.

6.	Define and recognize parent-subsidiary, brother-sister, and combined controlled group.