346Lec12 - Dividend Received Deduction Limits per p 17-18 1...

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Dividend Received Deduction Limits per p. 17-18 DRD % 1 Dividend $10,000 70% $7,000 8000 0.7 2 TI before DRD $6,000 70% $4,200 1000 0.8 1000 1 TI before DRD $6,000 Actual DRD $(7,000) TI $(1,000) DRD % 1 Dividend $10,000 70% $7,000 2 TI before DRD $8,000 70% $5,600 TI before DRD $8,000 Actual DRD $(5,600) TI $2,400 Subsidiary Parent Indidivual Total Tax Subsidiary TI 1,000 tax (200) 200 800 Taxabe Dividend to parent 800 tax (160) 160 640 640 (128) 128 512 total tax 488 48.8% Potential Deduction Potential Deduction
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Schedule M-1 (p.2-25, ex. 34) Book Inc $92,400 Fed IT $7,500 Exempt Inc. $(5,000) Int. Exp. (for exempt) $500 Life Insur. Proceeds $(50,000) Life Insur. Premiums $2,600 Excess Capital Losses $2,000 Tax. Inc. $50,000 Book Deprec. > MACRS + to book Book Deprec. < MACRS - from book Timing Differences that reverse Depreciation vs. MACRS Capital losses "Excess" charitable contributions Deduction m-1 adjustment Yr. 1 Yr. 2 Yr. 1 Yr. 2 Charitable for book 20,000 9000 11000 11000 -11000 TI for tax before char. 90000 TI for tax before char. Yr 2 120,000
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Taxable Income
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Unformatted text preview: $60,000 $100,000 $300,000 $425,000 Brackets 0-50 $50,000 $50,000 $50,000 $50,000 50-75 $10,000 $25,000 $25,000 $25,000 75-100 $- $25,000 $25,000 $25,000 100-335 $- $- $200,000 $235,000 >335 $- $- $- $90,000 $60,000 $100,000 $300,000 $425,000 Tax 15% $7,500 $7,500 $7,500 $7,500 25% $2,500 $6,250 $6,250 $6,250 34% $- $8,500 $8,500 $8,500 39% $- $- $78,000 $91,650 34% $- $- $- $30,600 $10,000 $22,250 $100,250 $144,500 $144,500 Tax Savings Per Law If 34% 0-50 $7,500 $17,000 50-75 $6,250 $8,500 $13,750 $25,500 $11,750 Impact of Surtax 100-335 $235,000 % 5% $11,750 Qualifying Expenditures $50,000 Tax Credit Rate 20% If deduction Cost $50,000 $50,000 MTR 15% 34% Tax Benefit $7,500 $17,000 After-Tax Cost $42,500 $33,000 If credit Cost $50,000 $50,000 Credit % 20% 20% Tax Benefit $10,000 $10,000 After-Tax Cost $40,000 $40,000 Foreign US FEI 1000 1000 tax rate 0.35 0.2 tax 350 200 tax credit-200 US Tax...
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  • Spring '13
  • WILSON
  • Accounting, Taxation in the United States, tax credit, TI

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