X Corp has $200,000 of gross receipts from sales, $300,000 of operating expenses, and $150,000 of dividends received from a 10% owned corporation. What is X Corp's dividends-received deduction?
X Corp has $200,000 of gross receipts from sales, $300,000 of operating expenses, and $150,000 of dividends received from a 10% owned corporation. What is X Corp's dividends-received deduction?
Chapter17: Corporations: Introduction And Operating Rules
Section: Chapter Questions
Problem 1BCRQ
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Transcribed Image Text:X Corp has $200,000 of gross receipts from sales, $300,000 of operating expenses, and $150,000 of dividends received
from a 10% owned corporation. What is X Corp's dividends-received deduction?
25,000
Expert Solution
Step 1
Dividend received from less than 20% owned domestic corporations per TCJA is 50% DRD.
Exception case: DRD % is applied on the lesser of dividend income or income before DRD (unless applying the DRD % on the dividend income creates NOL; in this, DRD is again calculated on the dividend income).
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