What is DRD deduction?
Understand the Problem
The question is asking for the definition of DRD deduction. This likely refers to a specific type of tax deduction or financial concept. Further context might be needed to give a precise answer, but a general explanation of 'deduction' in a financial context is helpful.
Answer
The Dividends Received Deduction (DRD) is a U.S. tax deduction for corporations to prevent triple taxation on dividends received from other corporations.
The Dividends Received Deduction (DRD) is a tax deduction in the U.S. for corporations receiving dividends from other corporations. It aims to prevent triple taxation by allowing the recipient corporation to deduct a portion of the received dividends. The deductible percentage varies based on ownership stake.
Answer for screen readers
The Dividends Received Deduction (DRD) is a tax deduction in the U.S. for corporations receiving dividends from other corporations. It aims to prevent triple taxation by allowing the recipient corporation to deduct a portion of the received dividends. The deductible percentage varies based on ownership stake.
More Information
The DRD ensures that profits are not taxed multiple times as they move from one corporation to another. The specific percentage that can be deducted depends on the level of ownership the recipient corporation has in the corporation paying the dividend.
Tips
A common mistake is assuming the DRD is a flat percentage for all corporations. The actual deduction varies based on the percentage of ownership.
Sources
- What Is the Dividends Received Deduction (DRD) Tax Deduction? - investopedia.com
- Dividends Received Deduction: What It Is and How It Works - fool.com
- Dividends received deduction - Wikipedia - en.wikipedia.org
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