Reference no: EM131970782
Riverbend Inc. received a $200,000 dividend from stock it held in Hobble Corporation. Riverbend's taxable income is $2,100,000 before deducting the dividends received deduction (DRD), a $40,000 NOL carryover, a $10,000 domestic production activities deduction, and a $100,000 charitable contribution.
a. What is Riverbend's deductible DRD assuming it owns 10 percent of Hobble Corporation?
b. Assuming the facts in part a, what is Riverbend's marginal tax rate on the dividend?
c. What is Riverbend's DRD assuming it owns 60 percent of Hobble Corporation?
d. Assuming the facts in part c, what is Riverbend's marginal tax rate on the dividend?
e. What is Riverbend's DRD assuming it owns 85% of Hobble Corporation (and is part of the same affiliated group)?
f. Assuming the facts in part e, what is Riverbend's marginal tax rate on the dividend
Wasatch Corp. (WC) received a $200,000 dividend from Tager Corporation (TC). WC owns 15 percent of the TC stock. Compute WC's deductible DRD in each of the following situations:
a. WC's taxable income (loss) without the dividend income or the DRD is $10,000.
b. WC's taxable income (loss) without the dividend income or the DRD is ($10,000).
c. WC's taxable income (loss) without the dividend income or the DRD is ($59,000).
d. WC's taxable income (loss) without the dividend income or the DRD is ($61,000).
e. WC's taxable income (loss) without the dividend income or the DRD is ($500,000).
f. What is WC's book-tax difference associated with its DRD in part a? Is the difference favorable or unfavorable? Is it permanent or temporary?
Q.Suzanne, an individual, began business four years ago and has never sold a §1231 asset. Suzanne owned each of the assets for several years.
In the current year, Suzanne sold the following business assets: Assuming Suzanne's marginal ordinary income tax rate is 35 percent, what is the character of the gains and losses and what affect do they have on Suzanne's tax liability?
Capital Corporation had the following results in 1997:
Gross receipts from operations.................................................... $200,000
Net short-term capital gain........................................................ 50,000
Net long-term capital loss......................................................... (75,000)
Cost of goods sold................................................................... 60,000
Operating expenses................................................................... 40,000
Dividends received from 30% owned domestic corporation..................... 80,000
a. What is Capital Corporation's taxable income and regular income tax liability for 1997 (10)?
b. Assuming that Capital Corporation's taxable income in 1996, its first year of existence, was $400,000, which included a net short-term capital gain of $50,000, what advice should be given to Capital with respect to its net capital gain/loss situation.