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Determining deductions on corporate dividends

U.S. corporations may be able to deduct from federal taxable income a portion of the dividends received from American Funds. Use our Corporate Dividends Received Deduction worksheet to determine how much of your corporation’s total dividends may be eligible for this deduction.

The Corporate Dividends Received Deduction (DRD) allows eligible U.S. corporations that receive dividends from other U.S. corporations to deduct 70% of the total U.S. corporate dividends received from their federal taxable income.

To be eligible for the DRD, the corporation must have held the shares on which the dividend was paid for at least 46 days during the 91-day period that began 45 days before the fund’s exdividend date (ex-date). The ex-date is the date on which the dividend is deducted from the fund’s per share net asset value. For purposes of the holding period, you may not count the day on which you purchased the shares or acquired them by reinvesting dividends, but may count the day you sold the shares.

You can find other interactive worksheets and information in our Tax Center. Some of the worksheets request information from an American Funds Form 1099-DIV. However, because corporations do not receive this form, you should refer to the American Funds Year-End Statement to find information such as income dividends, capital gain distributions and foreign tax paid.

You can view or print year-end account statements, or order duplicate statements by calling 800/325-3590. You’ll need your company’s account number and password.

Each corporate investor's tax situation is unique. We strongly urge you to consult a tax adviser, the Internal Revenue Service or your state tax authority to determine how specific tax laws apply to your organization.

Contact your financial adviser or call us for further assistance.

Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses, summary prospectuses and CollegeAmerica Program Description, which can be obtained from a financial professional and should be read carefully before investing. CollegeAmerica is distributed by American Funds Distributors® and sold through unaffiliated intermediaries.