DRD

Question 1

Dividends received deduction

Answer 1

Deduction that allows C corp who receives dividends from another corporation to deduct those dividends

Question 2

DRD limits

Answer 2

Depends on % ownership of the corp we receive dividends from.

20% owner - 70% ded
>20% ownership - 80%
>80% ownership- 100% DRD

limited to lesser of
- DRD% * Taxable income before DRD or the actual DRD ( %* dividiends received)

Question 3

DRD exclusions

Answer 3

• div from reit
• exempt corp
• wash transaction

Question 4

Additional DRD limits

Answer 4

• If a corp has a NOL than just take the full DRD
• First determine whether the corp has a NOL using the full DRD. If yes than take full DRD
• if the corp does not have an NOL than you have to take the lesser of approach.

Question 5

Determining NOL

Answer 5

To determine NOL Figure the DRD without the 80/70 taxable income limit