Calculate rho expected taxable income

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Problem - Rho Corporation owns 22% of Divvy Corporation's stock. Divvy has paid Rho $100,000 in dividends for the current year with the last dividend payment made on December 15. Rho is doing some year-end tax planning and, as of now, expects an operating loss of $35,000 not counting the dividend income. Thus, Rho expects $65,000 ($100,000 - $35,000) of taxable income before the dividends-received deduction.

a) Calculate Rho's Expected taxable income and tax liability for the current year and using the facts.

b) Given the result in Part a, what year-end tax planning strategies can you suggest to improve Rho's benefit of the dividends-received deduction for the current year?

Reference no: EM132950665

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