Question

2. For the current year, The Echo Company possessed the following income: \textup{Profit from operations}=\$110\textup{,}000 \textup{Dividends from 20\%-owned taxable domestic operation}=\$1\textup{,}100 In the Echo Company's current year taxable income, how much should be included for dividends received?

Answer 1

Answer:

220 dollars should be included in companies taxable income.

Explanation:

This problem wants us to calculate the amount of dividends to be included in the Echo Company's taxable income for the current year. Echo Company's has received dividend from 20% owned taxable domestic compnay, The company is eligible for 80% dividends received deduction. We can compute this value using the following formula:

Dividends=$1,100-(80% * $1,100)

Dividends= 1,100-$880

Dividends=$220