Question

In: Accounting

A corporation's taxable income before the dividends receiveddeduction (DRD) is $80,000. Included in the $80,000...

A corporation's taxable income before the dividends received deduction (DRD) is $80,000. Included in the $80,000 is $90,000 for dividend income the corporation received from another corporation in which it owns 60% of the common stock. The corporation's DRD is:


A.

$52,000


B.

$54,000


C.

$58,500


D.

$48,000

Solutions

Expert Solution

As corporation owes 60% in the corporation from which dividend is received, therefore dividend received deduction = 65% of dividend received = $90,000 *65% = $58,500

However deduction is limited to 65% of taxable income only, therefore DRD = $80,000 * 65% = $52,000

Hence option A is correct.

ekkarill92 answered 3 years ago
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