Impact
This deduction is designed to reduce the consequences of triple taxation. Otherwise, corporate profits would be taxed to the corporation that earned them, then to the corporate shareholder, and then to the individual shareholder. While Congress allowed for double taxation on corporations, it did not intend a triple - and potentially infinitely-tiered - tax to apply to corporate profits at every level of their distribution.
The dividends-received deduction complements the consolidated return regulations, which allow affiliated corporations to file a single consolidated return for U.S. federal income tax purposes.
Read more about this topic: Dividends Received Deduction
Famous quotes containing the word impact:
“As in political revolutions, so in paradigm choice—there is no standard higher than the assent of the relevant community. To discover how scientific revolutions are effected, we shall therefore have to examine not only the impact of nature and of logic, but also the techniques of persuasive argumentation effective within the quite special groups that constitute the community of scientists.”
—Thomas S. Kuhn (b. 1922)
“The question confronting the Church today is not any longer whether the man in the street can grasp a religious message, but how to employ the communications media so as to let him have the full impact of the Gospel message.”
—Pope John Paul II (b. 1920)
“Conquest is the missionary of valour, and the hard impact of military virtues beats meanness out of the world.”
—Walter Bagehot (1826–1877)