The Tax Cuts and Jobs Act changed the dividends received deduction for corporations.

Prior Law

Through December 31, 2017

Dividends received by a corporation from another corporation were 70% excluded from income for less than 20% owned domestic corporations and 80% excluded from income for more than 20% owned domestic corporations.

New Law

Effective for tax years beginning after December 31, 2017

The percentage excluded from income is decreased from 70% to 50%, and from 80% to 65%.

Commentary

The general impact of this will be to keep the tax on dividends received by a corporation substantially the same under current and prior law. The combination of lower exclusions and lower tax rates creates almost the same actual tax due on dividends received.

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Doug Wendlandt
I began my career in public accounting in 1978 and became a certified public accountant in 1981. I worked at a public accounting firm for 25 years and then started my own practice. In 2010, Hawkins Ash CPAs acquired my firm in Marshfield and welcomed me as a partner. I am a member of the firm’s Tax Committee.

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