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Redbird Corporation, a calendar year taxpayer, receives dividend income of $250,000 from a corporation in which it holds a ten percent interest. Redbird also receives interest income of USD 35,000 from municipal forms. [The municipality used the proceeds from the bond issue to construct a library.] Redbird borrowed funds to purchase the municipal bonds & pays USD 20,000 of interest on the loan. Excluding the items noted above, Redbird’s taxable income is USD 500,000.

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