[lostreflections]

I was wondering if anyone else has the same issue. Or it is just me over thinking some questions or some of them are really poorly constructed grammatically? I feel frustrated (grrrrrrrrrrr)every time I get the answer wrong even though my though processing is correct.

For an example (just came across this one as I was studying)

Q. In Year 2. Garald’s Corp. contributed $40,000 to a qualified organization. Garald’s Year 2 taxable income before the deduction for charitable contribution was $410,000. Included in that amount is a $20,000 dividend received deduction. Garald also had carryover contributions of $5,000 from the prior year. In Year 2 what amount can Garald deduct as charitable contribution.

Now, we are all well aware of the 10% of an income before any Dividend Received Deduction is an allowable charitable deduction for the year.

So, naturally, my calculation was: total charitable for Year 2 = 40,000+5,000 (carry over)= 45,000; (410,000 *10) = 41,000 allowable deduction and the rest is carried over.

However, this is WRONG according to Becker. They says income is (410,000+20,000)*10%=43,000 but it clearly says in the question: INCLUDED IN THAT AMOUNT!!!! So, why are we adding this 20,000 again?????

Can someone please explain?

[Anonymous]

I got the same question wrong over the weekend, but after reading the text (Specifically page: R3-24) the corporate charity deduction is 10% of Gross Income before any Special Deductions (Charity and DRD)

Since the $410K above includes the DRD deduction, you would need to add it back in order to get to Gross Income before any special deductions.

Yeah, but I agree, the wording is a bit tricky in that question..

[Author]

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