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 2 years agoRelated Solutions
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