[Anonymous]

Sales 20,000

Expense <22,000>

<2,000>

Dividend Income 10,000

Taxable Income $8,000

Taxable Income $8,000

x DRD Rate 80% (Assume 80% for this example)

DRD <$6,400>

Taxable Income $1,600

-If DRD brings a loss situation, you can take full DRD

-If Taxable Income remains after DRD, only a partial DRD (T.I. x DRD %) is allowed

---

Why in this example do you multiply 80% by the taxable income instead of 80% by the dividend income? It would reduce taxable income to 0 and thus no taxable income would remain for partial DRD rule.

[Jordan23cc]

I believe you only do the full drd exclusion if it results in a loss or a greater loss. Since it is 0, you only use partial. That's what I believe this question is getting at.

F - 2/15/2014 - 85
B - 2/26/2014 - 88
R - 4/1/2014 - 83
A - 4/21/2014 - 95

Licensed CPA in TX

I can do all things through Christ who strengthens me.

[Jordan23cc]

I believe you only do the full drd exclusion if it results in a loss or a greater loss. Since it is 0, you only use partial. That's what I believe this question is getting at.

F - 2/15/2014 - 85
B - 2/26/2014 - 88
R - 4/1/2014 - 83
A - 4/21/2014 - 95

Licensed CPA in TX

I can do all things through Christ who strengthens me.

[Study Monk]

I believe its the lesser of regular income or dividend income. It looks like questions lean towards making the regular income lower to confuse people.

I spoke to an ancient wise man who sent me on a mushroom induced journey through an ancient forest to find the key to passing the CPA exam. A talking spider monkey told me to throw the last of my drinking water in the dirt to find what I was looking for. So I followed his instructions and the following message appeared in the soil:

"Do 5000 multiple choice questions for each section"

[Study Monk]

I believe its the lesser of regular income or dividend income. It looks like questions lean towards making the regular income lower to confuse people.

I spoke to an ancient wise man who sent me on a mushroom induced journey through an ancient forest to find the key to passing the CPA exam. A talking spider monkey told me to throw the last of my drinking water in the dirt to find what I was looking for. So I followed his instructions and the following message appeared in the soil:

"Do 5000 multiple choice questions for each section"

[Author]

Replies