Can someone please explain to me why the answer is $45,000?
In Year 1, Best Corp., an accrual basis calendar year C corporation, received $100,000 in dividend income from the common stock that it held in an unrelated domestic corporation. The stock was not debt financed and was held for over a year. Best recorded the following information for Year 1:
Loss from Best's operations $ (10,000)
Dividends received $ 100,000
Taxable income (before dividends-received deduction) $ 90,000
Best's dividends-received deduction on its Year 1 tax return was: $45,000
I thought the DRD is the lesser of 50% of dividend income which is 50,000 or 50% of taxable income including dividend income which is $95,000 (50% x (100,000+90,000). In other Becker questions, they would include the dividend income calculate the deduction except for this one. Why is that?
Thank you so much very much.
AUD - NINJA in Training BEC - NINJA in Training FAR - 85 REG - 81