Drake Tax – 1120: Dividends

Last Updated: November 02, 2026

Data Entry

Enter dividends received by the corporation, as well as special deductions, on screen C.

The Dividends Received Deduction Worksheet (Wks DRD) is produced based off data entered in fields 3-1, 3-2, 3-3, and 3-4. The result of the Wks DRD is carried to Schedule C, line 3.

The total from Schedule C, line 23, column A is carried to Form 1120, line 4 (“Dividends”), and the total from Schedule C, line 24, column C is carried to Form 1120, line 29b (“Special deductions”).

Foreign-Sourced Income and Dividends

Use lines 13 and 14 of screen C to report foreign-sourced dividends.

-Line 13-

Enter on line 13 of screen C the foreign-sourced portion of dividends that both:

• Are received from specified 10%-owned foreign corporations, including gain from the sale of stock of a foreign corporation that is treated as a dividend for the purposes of applying section 245A under sections 128(a) and (j).
• Qualify for the 100% deduction under section 245A excluding any hybrid dividends.

-Line 14-

Include on line 14 of screen C any hybrid dividends from controlled foreign corporation (CFC) dividends not reportable on lines 3, 6, 7, 8, 11, 12, or 13. Hybrid dividends generally are dividends from a CFC that would otherwise be reported on line 13 except that the CFC receives a deduction (or other tax benefit) with respect to any income, war profits, or excess profit taxes imposed by any foreign country or possession of the U.S.

Include on line 14 the corporation’s share of distributions from a section 1291 fund from Form 8621 to the extent that the amounts are taxed as dividends under section 301. See the Form 8621 instructions for details.

Enter dividends paid by a corporation on screen DED using the Other deductions (itemize) field. Review the guidelines for deducting dividends paid in the 1120 Instructions:

“Dividends paid in cash on stock held by an employee stock ownership plan. However, a deduction may be taken for these dividends only if, according to the plan, the dividends are:

1. Paid in cash directly to the plan participants or beneficiaries;
2. Paid to the plan, which distributes them in cash to the plan participants or their beneficiaries no later than 90 days after the end of the plan year in which the dividends are paid;
3. At the election of such participants or their beneficiaries (a) payable as provided under (1) or (2) above, or (b) paid to the plan and reinvested in qualifying employer securities; or
4. Used to make payments on a loan described in section 404(a)(9).

See section 404(k) for more details and the limitation on certain dividends.”

Resources

For more information, see:

• Instructions for Form 1120
  • Schedule C. Dividends and Special Deductions
  • Line 26, Other Deductions
• Publication 542