CHAPTER2-LECTURE3 - A B INDIVIDUAL SHAREHOLDERS CORP CORP XI DIVIDENDS RECEIVED DEDUCTION(DRD PURPOSE IS TO PREVENT OR MINIMIZE THE IMPACT OF TRIPLE

CHAPTER2-LECTURE3 - A B INDIVIDUAL SHAREHOLDERS CORP CORP...

This preview shows page 1 - 5 out of 12 pages.

XI. DIVIDENDS RECEIVED DEDUCTION (DRD) PURPOSE IS TO PREVENT OR MINIMIZE THE IMPACT OF TRIPLE TAXATION (AVAILABLE ONLY TO DOMESTIC CORPORATIONS) (STOCK MUST BE HELD FOR MORE THAN FORTY-FIVE (45) DAYS DURING A NINETY (90) DAY PERIOD BEFORE ITS SALE OR OTHER DISPOSITION (IN THE CASE OF PREFERRED STOCK, MORE THAN NINETY (90) DAYS DURING A ONE-HUNDRED EIGHTY (180) DAY PERIOD BEFORE ITS SALE OR OTHER DISPOSITION) (1) DEDUCTION PERCENTAGE OWNERSHIP DEDUCTION PERCENTAGE * PERCENTAGE LESS THAN 20% 70% 20% OR MORE BUT 80% LESS THAN 80% 80% OR MORE 100% * - VOTING POWER AND VALUE (2) TAXABLE INCOME BEFORE DIVIDENDS RECEIVED DEDUCTION GROSS INCOME (REVENUES) FROM OPERATIONS - EXPENSES FROM OPERATIONS INDIVIDUAL SHAREHOLDERS B CORP A CORP
Image of page 1
+ DIVIDENDS RECEIVED = TAXABLE INCOME BEFORE DIVIDENDS RECEIVED DEDUCTION TAXABLE INCOME BEFORE : (1) NET OPERATING LOSS (2) CAPITAL LOSS CARRY BACK (3) DIVIDENDS RECEIVED DEDUCTION (4) DOMESTIC PRODUCTION ACTIVITIES DEDUCTION 3 (3) STEPS IN COMPUTING DIVIDENDS 4 RECEIVED DEDUCTION 5 STEP 1: MULTIPLY DIVIDENDS 6 RECEIVED BY THE DEDUCTION 7 PERCENTAGE STEP 2: MULTIPLY TAXABLE INCOME BEFORE DIVIDENDS RECEIVED DEDUCTION (TIBDRD) BY DEDUCTION PERCENTAGE STEP 3: THE DIVIDENDS RECEIVED DEDUCTION IS THE LOWER OF STEP 1 OR STEP 2 UNLESS SUBTRACTING STEP 1 FROM
Image of page 2
TAXABLE INCOME BEFORE DIVIDENDS RECEIVED DEDUCTION (TIBDRD) YIELDS A LOSS . IF SO, STEP 1 IS THE DIVIDENDS RECEIVED DEDUCTION PROBLEM 54 XII. ORGANIZATIONAL EXPENSES QUALIFYING EXPENSES (1) LEGAL FEES (2) ACCOUNTING FEES (3) EXPENSES OF TEMPORARY DIRECTORS AND ORGANIZATIONAL MEETINGS OF DIRECTORS AND SHAREHOLDERS (4) STATE INCORPORATION FEE COSTS OF ISSUING, SELLING OR PRINTING STOCK CERTIFICATES ARE NOT QUALIFYING EXPENSES (AND, THEREFORE, NOT DEDUCTIBLE) QUALIFYING EXPENSES MUST BE INCURRED (NOT NECESSARILY PAID) BEFORE THE END OF THE TAXABLE YEAR IN WHICH CORPORATION BEGINS BUSINESS: BUSINESS BEGINS (WHEN FIRST OF THESE TO OCCUR)
Image of page 3
(1) HAD SHAREHOLDERS (2) HAD ASSETS (3) BEGAN DOING BUSINESS
Image of page 4
Image of page 5

You've reached the end of your free preview.

Want to read all 12 pages?

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture