[Harry]

In the current year, Brown, a C Corp. has gross income (before dividends) of $900,000 and deductions of $1,100,000 (excluding the DRD). Brown received dividends of $100,000 from a Fortune 500 corporation during the current year. What is Brown’s net operating loss?

The answer to this question is $170,000 and I do not know why. Can anybody help?

Thanks!

[GinjaNinja]

A Fortune 500 Company would be considered unaffiliated, so the dividends received deduction (DRD) for the $100,000 dividends would be 70% (i.e. $100,000 x 70% = $70,000)

Step 1) $900,000 – $1,100,000 = ($200,000)
Step 2) ($200,000) + $100,000 = ($100,000)
Step 3) ($100,000) – ($70,000) = ($170,000) NOL

[Harry]

Thank you Ginja! Now I got it.

[Author]

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