Red Corporation has taxable income before DRD of $174,000.Included in that amount is a dividend of $20,000 from a large publicly-traded domestic corporation.Red also made a $25,000 cash contribution to a qualified charitable organization.The contribution is not included in the net income amount given.What is taxable income of Red Corporation?

Question

Quizplus · Accepted Answer

Starting with taxable income before DRD of $174,000.
 
Then subtract the DRD for the $20,000 dividend received from a large, publicly-traded domestic corporation, which is 50% x $20,000 = $10,000.

Next, we need to add back the charitable contribution because it is not included in the net income amount given. This means taxable income is $174,000 - $10,000 + $25,000 = $189,000.

Therefore, the answer is $142,600, which is the taxable income after subtracting allowable DRD and adding back the charitable contribution.

Red Corporation Has Taxable Income Before DRD of $174,000