[Anonymous]

Hello fellow NINJAs!

I’ve been doing some last minute cramming in preparation of my REG exam this Friday. I’ve been doubling down on the simulations from both Becker and NINJA, as that is the only area in my previous unsuccessful attempt at REG (71). I’ve come across a question in one of the NINJA sims that counters what I learned in the Becker program and also what is in IRS Pub 542. I’d like to clarity / reassurance that I’m reading the question correctly and not going crazy or seeing/not seeing something.

The simulation in question asks to calculate various corporate net income scenarios, one scenario gives preliminary net income, charitable contributions (CC) paid, dividends received & % ownership to calculate dividend received deductions(DRD).

Here is the formula I used to calculate the answer, which came back wrong:

NI + DIV = Adj PreNI @ 10% = CC deductible (CCD). NI+DIV-CCD – DRD = corporate net income before taxes

The Ninja Sim came back incorrect, the explanation provided showed:

Pre-NI – (10% of Pre NI for CCD) = Adj PreNI + Dividends Received – DRD = Taxable Income

In the Becker material and problems, they teach that to calculate CCD, you include the dividend income in the CCD, so the answer in the Ninja SIM counters what I’ve learned and I feel I’m going a little crazy trying to figure out which one is correct.

If anyone can provide any clarity, I would greatly appreciate it!

[maxheadroom88]

Your way seems right ..the charity deduction should be 10% of adjusted taxable income which includes dividends recieved

Far: 82 Aug 2014
Bec: 79 Aug 2014
Aud:78 Oct 2014
Reg: 81 Nov 2014 done!!!!

[Author]

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