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16 October, 01:45

In 2019, Pine Corporation had losses of $20,000 from operations. It received $180,000 in dividends from a 25%-owned domestic corporation. Pine's taxable income is $160,000 before the dividends-received deduction. What is the amount of Pine's dividends-received deduction?

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  1. 16 October, 05:13
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    Consider the following calculations

    Explanation:

    Net income per books $65,000

    Add back:

    Federal income taxes 9,700

    Excess contributions 3,000

    Life insurance premiums 10,000

    $87,700

    Subtract:

    Tax-exempt interest (1,500)

    Excess depreciation (4,500)

    Taxable income $81,700

    Dividend received deduction = 160000 x 80% = 128000 (full DRD doesn't create loss).

    DRD will be 80% of taxable inome because percent partnership is 25% which is between 20 to 80%.
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