Please help me to calculate the dividend received reduction according to followi
ID: 2473578 • Letter: P
Question
Please help me to calculate the dividend received reduction according to following facts:
Falcon received the following amount of dividend income from other corporations in the current year:
I need the DRD to calcuate the book-tax difference.
Please let me know if you need more information.
Financial tatements 7 (14,000,000) 7,500,000 (10,000) (5,000) (14,000) 14,700 315,000 2,250,000 275,000 35,000 900,000 100,000 12,000 87,183 25.000 250,000 115,000 84,000 250,000 60,000 20,000 Sales Dividends Blue and Gold Interest Received from Munic ipal Bonds Interest Received from Corporate Investments Gains/Loss on sale of ass ets Compensation of Officers Salaries & Wages Repairs & Maintenance Bad Debts Federal Income Tax Expense State Income Tax Expense Interest Paid to Bank working capital loan Deprec iation Advertising Employee Benefits Health Insurance Employee Benetits Life Insurance Other Expense Meals & Entertainment Other Expense Offic e Expenses Other Expense Legal Expense Other Expense Miscellaneous Expens es Dividends Received Deduction (10% owned) Net Inc ome/Loss 2 1,746,117)Explanation / Answer
As the company owns less than 20% of the shares in Blue and Gold industries, then 70% of the dividend received is allowed as dividend received deduction.
Dividend received =$10,000, So, the amount to be deducted as dividend received decution = 70%* $10,000
=$7,000.