Cpa 05530 explanation choice d is correct while the

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Unformatted text preview: ross income Dividend income from a 30% owned domestic corporation Operating expenses $600,000 100,000 400,000 What is Beta's taxable income for the year? a. $200,000 b. $220,000 36 © 2009 DeVry/Becker Educational Development Corp. All rights reserved. Maxixishere Pdf Collection Becker CPA Review, PassMaster Questions Lecture: Regulation 3 c. $230,000 d. $300,000 CPA-05522 Explanation Choice "b" is correct. Corporate taxable income is calculated as follows for a corporation: Gross income Dividend income Operating expenses Dividends received deduction Taxable income $600,000 100,000** (400,000) (80,000) [80% DRD] $220,000 ** Note that the "gross income" amount for the calculation of taxable income should include dividend income; however, it does not appear that the $100,000 of dividends is included in the $600,000 gross income amount given. If it were, the answer options would be $100,000 less than they are. Choice "a" is incorrect. The dividends received deduction allows for a special deduction of 80% of the dividends received from a 20% to <80% owned domestic corporation, not 100% of the dividends received (which applies only to ownership of...
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This note was uploaded on 06/14/2013 for the course ACCOUNTING Regulation taught by Professor Becker during the Fall '10 term at Keller Graduate School of Management.

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