Answered: X Corp has $200,000 of gross receipts…

X Corp has $200,000 of gross receipts from sales, $300,000 of operating expenses, and $150,000 of dividends received from a 10% owned corporation. What is X Corp's dividends-received deduction?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

X Corp has $200,000 of gross receipts from sales, $300,000 of operating expenses, and $150,000 of dividends received
from a 10% owned corporation. What is X Corp's dividends-received deduction?
25,000

Expert Solution

Step 1

Dividend received from less than 20% owned domestic corporations per TCJA is 50% DRD.

Exception case: DRD % is applied on the lesser of dividend income or income before DRD (unless applying the DRD % on the dividend income creates NOL; in this, DRD is again calculated on the dividend income).

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