[Anonymous]

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

a.

$200,000

b.

$170,000

c.

$130,000

d.

$100,000

Answer is b. I didn’t know why we are following the 70% DRD rule.

In the explanation, it says we follow the 70% DRD rule.

Because The dividends received deduction (DRD) for entities that are controlled 0% to <20% (which is how a Fortune 500 corporation would be controlled) is.

Does this mean all fortune 500 corporation can only be controlled for less than 20%?

Anyone knows?

[Skynet]

When the question does not specify what percent ownership, you should always assume less than 20% ownership. Therefore there should be 70% DRD. Whether it is F500 company does not matter.

[Author]

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