35 2009 devrybecker educational development corp all

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Unformatted text preview: above, Brown's net operating loss is calculated as follows: Gross income before dividends $900,000 Add: Dividends received 100,000 Less: Deductions (excluding DRD) (1,100,000) (70,000) [$100,000 x 70%] Less: DRD $(170,000) NOL Choice "a" is incorrect. The dividends received deduction ($70,000 in this case) is allowed to be deducted before calculating the NOL-[$900,000 + $100,000 - $1,100,000 = ($100,000)]. Choice "b" is incorrect. The DRD is 70% of the dividends received ($70,000), not 30% (or, $30,000)[$900,000 + $100,000 - $1,100,000 - $30,000 = ($130,000)]. Choice "d" is incorrect. The DRD for ownership of a Fortune 500 company is 70% of the dividends received, not 100%-[$900,000 + $100,000 - $1,100,000 - $100,000 = ($200,000)]. CPA-05301 Type1 M/C A-D Corr Ans: B PM#108 R 3-01 75. CPA-05301 Released 2006 Page 6 Which of the following items should be included on the Schedule M-1, Reconciliation of Income (Loss) per Books With Income per Return, of Form 1120, U.S....
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