[Anonymous]

Why do you multiply 80%, which is the DRD rate, by 8000, which is the taxable income, instead of multiplying 80% by 10,000, which is the dividend income?????

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Sales 20,000

Expense <22,000>

<2,000>

Dividend Income 10,000

Taxable Income $8,000

Taxable Income $8,000

x DRD Rate 80%

(Assume 80% for this example)

DRD <$6,400>

Taxable Income $1,600

-If DRD brings a loss situation, you can take full DRD

-If Taxable Income remains after DRD, only a partial

DRD (T.I. x DRD %) is allowed

[JEjunkie]

In this case the taxable income in lower than the dividend. 8,000 < 10,000 You can't take a DRD for more than the amount of taxable income, so you you would use the 8,000 amount instead of 10,000. If the C Corp had taxable income of 12,000 with a 10,000 dividend it would be 10,000 x 80% and deducted in full from the dividend.

[Anonymous]

Gotcha. Thanks man.

[floacct]

That is not a completely accurate statement. U can still take the full drd dedution if it creates a loss. If it doesn't create a loss then u are limited to use taxable income. U know what they say, if ur taking a drd with low net income… then it better create a loss or ur out of luck

[Author]

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