I am not sure what you stated is correct. The DRD is the lesser of the applicable % of (1) dividends received or (2) taxable income (prior to subtracting DRD, NOL deduction, or capital loss carryback).
The EXCEPTION is if the DRD is greater and that greater DRD creates or adds to a loss, then you can use the greater DRD amount as the deduction.
Example #1:
Income from operations = $250,000
Dividends = $100,000
Deductions = ($200,000)
Taxable income = $150,000
DRD of 80% = $80,000
80% of TI = $120,000
Use lesser $80,000 as neither one gives a loss
Example #2:
Income from operations = $250,000
Dividends = $100,000
Deductions = ($280,000)
Taxable income = $70,000
DRD of 80% = $80,000
80% of TI = $56,000
Because the greater DRD creates a loss, use the $80,000, giving a loss of ($10,000).
Hope that helps.
FAR - 92 (4/27/12)
AUD - 96 (7/17/12)
BEC - 92 (8/30/12)
REG - 91 (11/12/12)
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