Following the procedure used in Example 27 in the text proceed as

Following the procedure used in example 27 in the

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Example 2654.Following the procedure used in Example 27 in the text, proceed as follows:AlmondBlondCherryCorporationCorporationCorporationStep 170% × $100,000 (dividend received)$70,00070% × $100,000 (dividend received)$70,00070% × $100,000 (dividend received)$70,000Step 270% × $200,000 (taxable income before DRD)$140,00070% × $50,000 (taxable income before DRD)$35,00070% × $90,000 (taxable income before DRD)$63,000Step 3Lesser of Step 1 or Step 2$70,000$63,000Generates a net operating loss$70,000Consequently, the dividends received deduction for Almond Corporation is $70,000under the general rule. Blond Corporation also claims a dividends received deduction of
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p. 2-21 57. Purple Corporation: Tax on—$65,000 Tax on $50,000 × 15% $ 7,500 Tax on $15,000 × 25% 3,750 Total tax $ 11,250 Azul Corporation: Tax on—$290,000 Tax on $100,000 $ 22,250 Tax on $190,000 × 39% 74,100 Total tax $ 96,350 Pink Corporation: Tax on—$12,350,000 Tax on $10 million $3,400,000 Tax on $2,350,000 × 35% 822,500 Total tax $4,222,500
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