Question

The Dawg corporation owns 11% of Company A and 34% of Company B. Dividends received from Company A were $113,000 and from Company B were $241,000. If Dawg's "adjusted"taxable income is $2,000,000, calculate Dawg's taxable income after including the dividend information. Taxable income

Answer 1

ANSWER

For 2019 year:-

	Allowed deduction of dividend income
If company owns less than 20% of other company	50%
If company owns 20% to 80% of other company	65%
If company owns more than 80% of other company	100%

Percentage holding of company A = 11%, therefore 50% deduction

Percentage holding of company B = 34%, therefore 65% deduction

Calculation of total taxable income:-

Drags income before dividend income	$2,000,000
Add:
Dividend received from company A	$113,000
Dividend received from company B	$241,000
Total taxable income before deduction	$2,354,000
Less: Deduction:-
Company's A dividend deduction (113,000 x 50%)	$56,500
Company's B dividend deduction (241,000 x 65%)	$156,650
Taxable income after including dividend income	$2,140,850

Therefore, taxable income is $2,140,850

_____________________________________________

If you have any query or any Explanation please ask me in the comment box, i am here to helps you.please give me positive rating.

*****************THANK YOU**************