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In: Accounting
Wasatch Corp. (WC) received a $200,000 dividend from Tager Corporation (TC). WC owns 15 percent of...
Wasatch Corp. (WC) received a $200,000 dividend from Tager Corporation (TC). WC owns 15 percent of the TC stock. Compute WC’s deductible DRD in each of the following situations:
a. WC’s taxable income (loss) without the dividend income or the DRD is $10,000.
b. WC’s taxable income (loss) without the dividend income or the DRD is $(10,000).
c. WC’s taxable income (loss) without the dividend income or the DRD is $(99,000).
d. WC’s taxable income (loss) without the dividend income or the DRD is $(101,000).
e. WC’s taxable income (loss) without the dividend income or the DRD is $(500,000).
f. What is WC’s book–tax difference associated with its DRD in part (a)? Is the difference favorable or unfavorable? Is it permanent or temporary?
Solutions
ekkarill92 answered 1 year agoRelated Solutions
Wasatch Corp. (WC) received a $200,000 dividend from Tager Corporation (TC). WC owns 15 percent of...
Wasatch Corp. (WC) received a $200,000 dividend from Tager
Corporation (TC). WC owns 15 percent of the TC stock. Compute WC’s
deductible DRD in each of the following situations:
a. WC’s 2020 taxable income (loss) without the
dividend income or the DRD is $10,000.
b. WC’s 2020 taxable income (loss) without the
dividend income or the DRD is $(10,000).
c. WC’s 2020 taxable income (loss) without the
dividend income or the DRD is $(101,000).
1. Wasatch Corp. (WC) received a $200,000 dividend from Tager Corporation (TC). WC owns 15 percent...
1. Wasatch Corp. (WC) received a $200,000 dividend from Tager
Corporation (TC). WC owns 15 percent of the TC stock. Compute WC’s
deductible DRD in each of the following situations:
a. WC’s taxable income (loss) without the
dividend income or the DRD is $10,000.
b. WC’s taxable income (loss) without the
dividend income or the DRD is $(10,000).
c. WC’s taxable income (loss) without the
dividend income or the DRD is $(99,000).
d. WC’s taxable income (loss) without the
dividend...
Griffin Corporation received $50,000 of dividend income from Eagle, Inc. Griffin owns 5 percent of the...
Griffin Corporation received $50,000 of dividend income from
Eagle, Inc. Griffin owns 5 percent of the outstanding stock of
Eagle. Griffin’s marginal tax rate is 21 percent.
Calculate Griffin’s allowable dividends-received deduction and
its after-tax cash flow as a result of the dividend from Eagle.
How would your answers to a change if Griffin owned 55
percent of the stock of Eagle?
How would your answers to b change if Griffin owned 85
percent of the stock of Eagle?
Velvet Corporation has revenues of $340,000 and deductible expenses of $350,000. It also received a $40,000 dividend from a corporation in which it owns 10 percent.
Velvet Corporation has revenues of $340,000 and
deductible expenses of $350,000. It also received a $40,000
dividend from a corporation in which it owns 10 percent. What is
the corporation’s taxable income?
In 2020, Riverbend Inc. received a $200,000 dividend from stock it held in Hobble Corporation. Riverbend's...
In 2020, Riverbend Inc. received a $200,000 dividend from stock
it held in Hobble Corporation. Riverbend's taxable income is
$2,100,000 before deducting the dividends-received deduction (DRD),
a $40,000 NOL carryover, and a $100,000 charitable contribution.
Use Exhibit 13-6. (Round your tax rates to 1 decimal place.
Leave no answer blank. Enter zero if applicable.)
a. What is Riverbend’s deductible DRD assuming
it owns 10 percent of Hobble Corporation?
b. Assuming the facts in part (a), what is
Riverbend’s marginal tax...
Spritz Company owns 15% of the stock of Turner Corporation. The investment was purchased for $200,000....
Spritz Company owns 15% of the stock of Turner Corporation. The
investment was purchased for $200,000. At the beginning of 2020, it
had a fair value of $230,000. At the end of 2020, its fair value is
$250,000. Turner reported net income of $100,000 for 2020, and
declared and paid cash dividends of $60,000. Spritz sells products
to Turner at a markup of 20% on cost. Turner’s ending inventory for
2020 included a balance of $10,800 for products purchased from...
Pepper Enterprises owns 95 percent of Salt Corporation. On January 1, 20X1, Salt issued $200,000 of...
Pepper Enterprises owns 95 percent of Salt Corporation. On
January 1, 20X1, Salt issued $200,000 of five-year bonds at 115.
Annual interest of 12 percent is paid semiannually on January 1 and
July 1. Pepper purchased $100,000 of the bonds on July 1, 20X3, at
par value. The following balances are taken from the separate 20X3
financial statements of the two companies:
Pepper Enterprises
Salt Corporation
Investment in Salt Corporation Bonds
$
100,000
Interest Income
6,000
Interest Receivable
6,000
Bonds...
Riverbend Inc. received a $252,500 dividend from stock it held in Hobble Corporation.
Riverbend Inc. received a $252,500 dividend from stock it held in Hobble Corporation. Riverbend's taxable income is $2,550,000 before deducting the dividends received deduction (DRD), a $41,500 NOL carryover, and a $104,000 charitable contribution. Use Exhibit 16-6. (Round your tax rates to 1 decimal place. Leave no answer blank. Enter zero if applicable.) a. What is Riverbend’s deductible DRD assuming it owns 10 percent of Hobble Corporation under new USA new taxation law.
The Dawg corporation owns 7.000000000000001% of Company A and 32.99999999999999% of Company B. Dividends received from...
The Dawg corporation owns 7.000000000000001% of Company A and
32.99999999999999% of Company B. Dividends received from Company A
were $116,000 and from Company B were $212,000. If Dawg's
"adjusted" taxable income is $2,000,000, calculate Dawg's taxable
income after including the dividend information.
The Dawg corporation owns 13% of Company A and 23% of Company B. Dividends received from...
The Dawg corporation owns 13% of Company A and 23% of Company B.
Dividends received from Company A were $104,000 and from Company B
were $243,000. If Dawg's "adjusted" taxable income is $2,000,000,
calculate Dawg's taxable income after including the dividend
information.
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