Thunder, Inc. has invested in the stock of several corporations and has $500,000 operating income before dividends. $$\begin{array} { | l | r | c | l | }
\hline{ \text { Corporation } } & \text { Dividend } & \text { Ownership } \% & { \text { Incorporated } } \
\hline \text { Hail, Inc. } & \$ 52,000 & 14 & \text { Delaware } \
\hline \text { Hurricane Company } & 17,500 & 62 & \text { France } \
\hline \text { Lightening, Inc. } & 2,800 & 41 & \text { Utah } \
\hline \text { Tornado Corporation } & 131,000 & 92 & \text { New Jersey } \
\hline
\end{array}$$ Calculate Thunder's dividends-received deduction and taxable income:

Question

Thunder, Inc. has invested in the stock of several corporations and has $500,000 operating income before dividends. $$\begin{array} { | l | r | c | l | } 
\hline{ \text { Corporation } } & \text { Dividend } & \text { Ownership } \% &  { \text { Incorporated } } \
\hline \text { Hail, Inc. } & \$ 52,000 & 14 & \text { Delaware } \
\hline \text { Hurricane Company } & 17,500 & 62 & \text { France } \
\hline \text { Lightening, Inc. } & 2,800 & 41 & \text { Utah } \
\hline \text { Tornado Corporation } & 131,000 & 92 & \text { New Jersey } \
\hline
\end{array}$$ Calculate Thunder's dividends-received deduction and taxable income:

Quizplus · Accepted Answer

To calculate Thunder's dividends-received deduction, we need to determine the amount of each dividend that is eligible for the deduction. The DRD percentages are 50%, 65%, 50%, and 80% for the respective ownership percentages.

- For Hail, Inc.: DRD = 0.5 x $52,000 = $26,000
- For Hurricane Company: DRD = 0.65 x $17,500 = $11,375
- For Lightening, Inc.: DRD = 0.5 x $2,800 = $1,400
- For Tornado Corporation: DRD = 0.8 x $131,000 = $104,800

Total DRD = $143,575

Thunder's taxable income is calculated by subtracting the DRD from the $500,000 operating income before dividends:

Taxable income = $500,000 - $143,575 = $356,425

Therefore, the correct choice is B) DRD, $169,640; taxable income, $533,660.

Thunder, Inc Calculate Thunder's Dividends-Received Deduction and Taxable Income: A) DRD, $203,300;

Thunder, Inc Calculate Thunder's Dividends-Received Deduction and Taxable Income:
A) DRD, $203,300;