Question

Crane and Loon Corporations, two unrelated C corporations, have the following transactions for the current year Crane Loon Gross income from operations Expenses from operations Dividends received from domestic corporations (15% ownership) $186,000 260,400 111,600 $297,600 312,480 223,200 Click here to access the dividends received deduction table. a. Compute the dividends received deduction for Crane Corporation. b. Compute the dividends received deduction for Loon Corporation. $

Answer 1

Crane Dividends Received 111600 DRD% 50% DRD Amount 55800 Loon 223200 50% 111600 Gross Income Dividends Expense Taxable income DRD Limitation Crane 186000 111600 -260400 37200 50% 18600 Loon 297600 223200 -312480 208320 50% 104160 Crane Taxable Amount 37200 DRD Amount 55800 Net operating Loss? -18600 Loon 208320 111600 96720 Full DRD 55800 Limitation 18600 Net operating Loss? Yes DRD 55800 111600 104160 No 104160

DRD is lesser of Full DRD or limitation, unless an Net operating loss in which case full DRD is allowed