Brace, Inc. owns 90% of West common stock. This year, Brace generated $50,000 operating income and received $10,000 dividends from West. Brace's taxable income is:

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Brace's taxable income includes its operating income of $50,000. The dividends received from West, a 90%-owned subsidiary, are likely eligible for the dividends received deduction (DRD), which can significantly reduce or eliminate the taxable income attributable to these dividends, depending on the jurisdiction's specific tax laws. Therefore, the dividends do not increase Brace's taxable income, leaving it at $50,000.