Cardinal corporation, a calendar year taxpayer, receives dividend income of $250,000 from a corporation in which it holds a 10% interest. cardinal also receives interest income of $35,000 from municip

Cardinal corporation, a calendar year taxpayer, receives dividend income of $250,000 from a corporation in which it holds a 10% interest. cardinal also receives interest income of $35,000 from municipal bonds. (the municipality used the proceeds from the bond issue to construct a public library.) cardinal borrowed funds to purchase the municipal bonds and pays $20,000 of interest on the loan. excluding these items, cardinal's taxable income is $500,000, on which it paid federal income tax of $200,000 during the year.