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Crane and Loon Corporations, two unrelated C corporations, have the following transactions for the current year....

Crane and Loon Corporations, two unrelated C corporations, have the following transactions for the current year.

   Crane    Loon

Crane Loon Gross income from operations $286,000    $457,600

Expenses from operations    400,400 480,480

Dividends received from domestic corporations (15% ownership) 171,600 343,200

a. Compute the dividends received deduction for Crane Corporation. $_________

b. Compute the dividends received deduction for Loon Corporation. $_______

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Answer #1

Percentage of ownership < 20 % so the applicable 70% deduction

Cranc 100000 x 70% : 70000 Loon cooposation 230000 870% - 16000 17500 154000 Step :-2 (701.& dividends! Received) Step-2 (701crane corporation qualifies for loss rule treatment because subtarcting 70000 from the taxable income yields a loss

So crane corporation eligible for 70000 deduction

Therefore

Dividend deduction % for crane corporation 70000 and for loon corporation is 154000

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