Question

Problem 11-4
Special Deductions and Limitations (LO 11.3)

Fisafolia Corporation has gross income from operations of $210,000 and operating expenses of $160,000 for the current year. The corporation also has $30,000 in dividends from publicly traded domestic corporations in which the ownership percentage was 45%.

Below is the Dividends Received Deduction table to use for this problem.

Percent Ownership	Dividends Received Deduction Percentage
Less than 20%	70%
20% or more, but less than 80%	80%
More than 80% Assume that instead of $210,000, Fisafolia Corporation has gross income from operations of $135,000. Calculate the corporation's dividends received deduction for the current year.	100%

Answer 1

Solution :-

Assume that instead of $210,000, Fisafolia Corporation has gross income from operations of $135,000. Calculate the corporation's dividends received deduction for the current year.

Here we need to findout the dividends received deduction for the current year from the given information .

Case 1 :-

Dividends received deduction for the current year = $135,000 + $30,000 - $160,000

= [165,000 - 160,000 ] * 80%

= 5,000 * 0.80

= $4,000

Dividends received deduction for the current year =  $4,000 .

Case 2 :-

Dividends received deduction for the current year = 30,000 * 80%

= $24,000

Dividends received deduction for the current year = $24,000

In Case-1 and case- 2 which is lessor that amount we should consider as a Dividends received deduction for the current year .

So, The answer is $4,000 .