In 2020, Avalanche Corporation has $70,000 of net income from operations during the current year. In...

In 2020, Avalanche Corporation has $70,000 of net income from operations during the current year. In addition, Avalanche received $180,000 of dividend income from a corporation in which Avalanche has a 10% ownership interest. What is Avalanche’s dividends received deduction for 2020?

Question 6 options:

$0.

$36,000.

$90,000.

$117,000.

$180,000

Solutions

Expert Solution

Answer:

Option c). $90,000

Calculation:

Here, we need to calculate Avalanche’s dividends received deduction for 2020.

Avalanche dividend income from a corporation = $180,000

The company receiving the dividend owns less than 20% of the company paying the dividend, the DRD amounts to 50% of the dividend received. Here the ownership is 10%

So, the Dividends Received Deduction is 50% of total dividends received by Avalanche.

Dividends Received Deduction (DRD) = 50% x 180,000 = $90,000

ekkarill92 answered 1 year ago

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