[jeff]

Free Study Planner, Notes, Audio, Flashcards: https://www.another71.com/cpa-exam-study-plan/

Free CPA Exam Survival Guide: https://www.another71.com/cpa-exam-survival-guide/

Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[CPAfit]

@mommy 17- C 90%, 100%

[MommyBear]

Bucky–Clarification please? So since taking the $100K reduced the taxable income to a loss, we take 70% against the taxable income BEFORE the DRD. So regarless of which area of % the DRD is initially calculated with (70%, 80%, or 100%), you automatically know to use 70% if you are going against taxable income and not the actual dividends received, right?

Or we are using the “unrelated” part to determine the 70% because that would mean they are a less than 20% owner? I am so confused. That loss number is tripping me up.

[Anonymous]

I don't think so Mommy. You use 70% unless stated otherwise but if their was 20% ownership, you would use 80%.

[Anonymous]

@MommyBear – The dividend received deduction is limited to a percentage of the taxable income of the corporation, unless the corporation sustains a net operating loss. If the corporation has a net operating loss, the dividend received deduction may be taken without limiting the deduction to a percentage of the corporation's taxable income.

[MommyBear]

I don't understand how they get the loss amount. Are we assuming there are other deductions besides the DRD that contributed to that loss amount. I assumed they had a 100% DRD because 90-100=-10, but I guess there could be other factors and I should just ignore HOW they got to the loss?

[Anonymous]

I think the ($10K) is the loss before any dividends. If you add the $100K received, you have $90K of income. Since you only have $90K of income, you can only take 70% of that amount for your DRD.

[Anonymous]

I ignored the loss and just looked at taxable income. I've never seen a problem stating it has a loss.

[MommyBear]

AH! So it is if they have a loss BEFORE adding the dividends and BEFORE taking the DRD…

[Anonymous]

I really miss the Hiyas – you are correct, MommyBear.

[MommyBear]

OK–I'll ignore the loss. That was the part that screwed me up completely. My first reaction was the correct one and then the loss confused me. Tricky SOBs.

[WANNABE_CPA]

Hey guys..i am going to take a final test, see how i am doing. I ll join you guys after that. Continous Mcqs and reading for 3 days after this.

FAR : 68, 74, 83 Thank you God 🙂
BEC : 78 (8/27) 🙂
REG : 72 ,80 (2/25) 🙂
AUD : 69,67, 07/23

[Anonymous]

ok – Good luck @Wannabe! See you later!

[MommyBear]

I want to take a test too. Did you get through all the SIMS practice questions?

[Anonymous]

19–Under which of the following circumstances is trust property with an independent trustee includible in the grantor's gross estate?

A. The trust is revocable.

B. The trust is established for a minor.

C. The trustee has the power to distribute trust income.

D. The income beneficiary disclaims the property, which then passes to the remainderman, the grantor's friend.

[MommyBear]

A

[Author]

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