Question
In: Accounting
n each of the following independent situations, determine the dividends received deduction for the calendar year...
n each of the following independent situations, determine the dividends received deduction for the calendar year C corporation.
Assume that Seafoam Corporation owns 40%, Oceanview owns 25% and Roughwaters owns 5% of the stock in the corporations paying the dividends.
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Click here to view the dividend received deduction ownership percentages and corresponding deduction percentage.
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Solutions
Expert Solution
|
Seafoam Corporation |
Oceanview Corporation |
Rough
waters Corporation |
|
| Income from operations | $240,000.00 | $480,000.00 | $700,000.00 |
| Expenses from operations | -$265,000.00 | -$485,000.00 | -$680,000.00 |
| Net Income from operations | -$25,000.00 | -$5,000.00 | $20,000.00 |
| Qualifying dividends | $100,000.00 | $100,000.00 | $100,000.00 |
| Income before the DRD (tentative income) | $75,000.00 | $95,000.00 | $120,000.00 |
| Dividends received deduction (70% × $100,000 dividends) | -$70,000.00 | -$70,000.00 | -$70,000.00 |
| Taxable income | $5,000.00 | $25,000.00 | $50,000.00 |
| The DRD is the lesser of: (1) 80% × $100,000 (dividends) = $80,000; or (2) 80% × $75,000 (tentative income) = $60000 | $60,000.00 | ||
| The DRD is the lesser of: (1) 80% × $100,000 (dividends) = $80,000; or (2) 80% × $95,000 (tentative income) = $76000. | $76,000.00 | ||
| The DRD is the lesser of: (1) 70% × $100,000 (dividends) = $70,000; or (2) 70% × $120,000 (tentative income) = $84000 | $70,000.00 | ||
| The dividends received deduction for Seafoam Corporation is | $60,000.00 | ||
| The dividends received deduction for Oceanview Corporation is | $76,000.00 | ||
| The dividends received deduction for Roughwaters Corporation is | $70,000.00 | ||
| Company owns more than 20% but less than 80 % of the company paying the dividend, the DRD amounts to 80% of the dividend received. | |||
| Company owns less than 20% of the company paying the dividend, the DRD amounts to 70% of the dividend received. | |||
| Company owns more than 80% t of the company paying the dividend, the DRD amounts to 100% of the dividend received. |
ekkarill92 answered 2 years agoRelated Solutions
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