Jenkins Corporation has the following income and expense items during the current year: $$\begin{array} { | l | r | }
\hline \text { Net loss from operations (before dividend income) } & ( \$ 25,000 ) \
\hline \text { Dividends from } 25 \% \text { owned corporations } & 150,000\\hline
\end{array}$$ The allowed dividends-received deduction is

Question

Jenkins Corporation has the following income and expense items during the current year: $$\begin{array} { | l | r | } 
\hline \text { Net loss from operations (before dividend income) } & ( \$ 25,000 ) \
\hline \text { Dividends from } 25 \% \text { owned corporations } & 150,000\\hline
\end{array}$$ The allowed dividends-received deduction is

Quizplus · Accepted Answer

The dividends-received deduction is 80% of the dividends received from 25% owned corporations. Therefore, the allowed dividends-received deduction is $150,000 x 80% = $120,000. However, the net loss from operations is ($25,000), so the maximum amount of the dividends-received deduction that can be used to offset taxable income is $120,000 - $25,000 = $95,000.

Jenkins Corporation Has the Following Income and Expense Items During