Griffin Corporation received $50,000 of dividend income from Eagle, Inc. Griffin owns 5 percent of the outstanding stock of Eagle. Griffin’s marginal tax rate is 35 percent.
a. Calculate Griffin’s allowable dividends-received deduction and its after-tax cash flow as a result of the dividend from Eagle.
b. How would your answers to a change if Griffin owned 55 percent of the stock of Eagle?
c. How would your answers to b change if Griffin owned 85 percent of the stock of Eagle?