Fisafolia Corporation has gross income from operations of $462,600 and operating
ID: 2479980 • Letter: F
Question
Fisafolia Corporation has gross income from operations of $462,600 and operating expenses of $323,820 for the current year. The corporation also has $46,260 in dividends from publicly traded domestic corporations (ownership in all corporations was less than 20 percent). a. Calculate the corporation's dividends received deduction for the current year. b. Assume that instead of $462,600, Fisafolia Corporation has gross income from operations of $277,560. Calculate the corporation's dividends received deduction for the current year.
Explanation / Answer
Answer 1.
Gross Income = $462,600
Operating Expnses = $323,820
Dividend Income = $46,260
Net Taxable Income = $185,040 (Income - Expenses + Dividend Income)
Since ownership is less than 20%, So Dividend Received Deduction is 70% of Net taxable Income or Dividend Income whichever is less.
Since, Dividend Income is less than the taxable income
So, Dividend Received Deduction = 70% of 46,260
= $32,382
Answer 2.
Gross Income = $277,560
Operating Expenses = $323,820
Dividend Income = $46,260
Net Taxable Income = $ 0 (Income - Expenses + Dividend Income)
Dividend Received Deduction = 70% of 46,260
= $32,382
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