Question

Crane and Loon Corporations, two unrelated C corporations, have the following transactions for the current year: Click here to access the dividends received deduction table. Compute the dividends received deduction for Crane Corporation. $______________ Compute the dividends received deduction for Loon Corporation. $_______________

Answer 1

Complete Question:

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

Crane,Loon

Gross Income: 180k, 300k

Expenses from operations: 100k, 230k

Div received: 100k, 230k

Compute the DRD for both companies

Solution:

DRD is a federal tax deduction for certain companies earning distributions from related entities in the United States. The amount of the dividend to be withheld from income tax by a corporation is related to how much it is owned in the business with the dividend.

Crane: 180k-255k+100k =25k-(100k*.5) = -25k so take 50k

Loon: 300k-310k+230k =220k-115.5k = 104.5+so good.

220.5k= 110k or 115k

Take lesser 110k

Crane DRD = 50k

Loon DRD = 110k