The following covers some of the basic rules for income and expenses of corporations that are dissimilar to those of individual taxpayers. The dividends received deduction is meant to reduce the negative effects of the double tax on C corporation profits distributed to corporation shareholders as dividends. Certain dividends from Federal Home Loan Banks. Capital gain dividends from a regulated investment company or real estate investment trust, and return of capital distributions do not qualify. Certain limitations apply to regulated investment company dividends received.
Special rules apply to dividends received from foreign corporations.
Corporations exempt from tax. Effective for dividends paid or accrued after September 5, 1997. The above limits are figured without regard to corporation net operating loss deductions, dividends received deductions, nontaxable portion of an extraordinary dividend, or capital loss carrybacks. Corporation Charitable Contributions C corporations are allowed to deduct charitable contributions as a business expense. No deduction is allowed if any of the net earnings of the receiving organization are used for the benefit of any private corporation shareholder or individual.