[ssaetern]

Wingate Corporation had the following income and expenses for 2018:
Income from operations $70,000
Dividend income (from less-than-20%-owned domestic corporations) $45,000
Expenses of operation $90,000
2017 net operating loss carryover $5,000
What is Wingate Corporation’s taxable income for 2018?

Gleim has the answer of taxable income (NOL) of $(2,500). How did they come up with a NOL? Shouldn’t it be zero?

[CH89]

Here is how I am getting a NOL of $2,500

70,000 Income
+45,000 Dividend Income
-90,000 Expense
-22,500 DRD (50% of the dividend income since less than 20%)
– 5,000 2017 NOL Carryover
= -2,500

I think because the DRD creates a NOL, you can take the full amount, giving you a NOL of $2,500.

[Author]

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