Windy Company has taxable income before DRD of $200,000.Included in that amount is a $10,000 dividend from a domestic corporation owned 10% by Windy and a $30,000 dividend from a domestic corporation owned 60% by Windy.What is the taxable income of Windy Company?

Question

Quizplus · Accepted Answer

Windy Company can deduct 50% of the $10,000 dividend (since it owns less than 20%) and 65% of the $30,000 dividend (since it owns 20% or more). The deduction is $5,000 + $19,500 = $24,500. Taxable income is $200,000 - $24,500 = $175,500.

Windy Company Has Taxable Income Before DRD of $200,000