Skinner Corporation,a calendar year C corporation,had the following transactions during the current year:
Income from operations
$800,000
Expenses from operations
900,000
Dividends from Siskin Corporation (20% ownership)
200,000

Skinner's taxable income (or NOL)for the current year is:

Question

Skinner Corporation,a calendar year C corporation,had the following transactions during the current year:
Income from operations
$800,000
Expenses from operations
900,000
Dividends from Siskin Corporation (20% ownership)
200,000
​
Skinner's taxable income (or NOL)for the current year is:

Quizplus · Accepted Answer

Skinner Corporation has an income from operations of $800,000 and expenses from operations of $900,000, resulting in a net operating loss (NOL) of $100,000. However, Skinner received dividends from Siskin Corporation, which are taxable income. The 20% ownership suggests that the dividends received are qualified dividends, so they are taxed at a lower rate. Nonetheless, the dividends increase taxable income by $200,000. Therefore, the taxable income is -$100,000 + $200,000 = $100,000, and the NOL is $60,000 ($100,000 - $40,000 depreciation deduction) which can be used to offset future taxable income.

Skinner Corporation,a Calendar Year C Corporation,had the Following Transactions During