Why is a dividends$-$received deduction disallowed if the stock on which the corporation pays the dividend is debt$-$financed?

A$.$ The dividends$-$received deduction is disallowed when the corporation pays the dividends on some debt$-$financed income when the dividends$-$received deduction creates a loss for the corporation in a way that is advantageous to the corporation.

B$.$ The dividends$-$received deduction is disallowed whenever the corporation pays dividends that is $10\%$ or more of their taxable income, before regard to the dividends$-$deduction.

C$.$ The disallowance is looked at on a case by case basis and is disallowed if the corporation cannot pay it back in less than $12$ months.

D$.$ It is disallowed to prevent a corporation from deducting interest paid on money borrowed to purchase the stock, while paying little or no tax on the dividends received on the stock. Otherwise, the corporation could gain an arbitrage advantage by acquiring debt$-$financed stock.