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12 July, 04:13

Westside, Inc. owns 15% of Innsbrook's common stock. This year, Westside generated $50,000 operating income and received $20,000 dividends from Innsbrook. Westside's taxable income is:

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  1. 12 July, 04:16
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    a. $56.000

    Explanation:

    Westside is entitled to a 70% DRD, so income is $70.000 - $14.000 DRD.

    What is DRD? The dividends received deduction (DRD) is a federal tax deduction in the U. S. that is given to certain corporations that get dividends from related entities. The amount of the dividend that a company can deduct from its income tax is tied to how much ownership the company has in the dividend-paying company.
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