[jags2899]

Hey all, have a quick DRD question. If the corporation has an operating loss, there would still be a DRD right? I know the issue with the limitations and how they don’t apply if a loss is created with DRD, but I am talking about before considering the DRD.

EX: Company has an operating Loss of 100,000. They receive a 50,000 dividend from a 5% owned company. Would they still have the normal DRD of 50,000 X 70%?

Thanks in advance

AUD--Passed
FAR--Passed
REG--Passed
BEC--Passed

[Keely]

Yes, they would still receive the DRD. If you understand the limitation, I don't understand what YOU don't understand (haha). Any time taking the DRD would create or add to a NOL, you disregard the percentage of taxable income limitation and take the full percentage deduction of the dividend, which, in your example's case, would be 70% of 50K. Hope this helps, but I'm not sure I understood your question well enough. I tried!

BEC: (4/2012) 88
AUD: (5/2012) 91
REG: (8/2012) 82
FAR: (1/2013) 78 🙂

VA CPA #42010

[Author]

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