Question

The Dawg corporation owns 5% of Company A and 21% of Company B. Dividends received from Company A were $102,000 and from Company B were $238,000. If Dawg's "adjusted" taxable income is $2,000,000, calculate Dawg's taxable income after including the dividend information.

Answer 1

Statement showing taxable income

Particulars	Amount
Adjustable Taxable Income	2,000,000
Deduction
In respect of dividend form company A ( As it is holing less than 20 %, 70% of dividend amount is allowed as deduction) =102000*70% = 71400	71400
In respect of dividend form company B ( As it is holing more than 20% but less than 80 %, 80% of dividend amount is allowed as deduction) =238,000*80% = 190400	190400
taxable Income	1,738,200

Since deduction amount is less than 70% of adjusted taxable income whole of deduction is allowed