Remsco has taxable income of $60,000 before considering charitable contributions. The $60,000 is net of a dividends received deduction of $12,000. Its charitable contributions for the year were $7,500. What is Remsco's current-year charitable contribution deduction and contribution carryover?

D) $7,200 current-year deduction; $300 carryover

Explanation:

Remsco's total modified taxable income for the year = $60,000 (net income) + $12,000 (dividends received deductions) = $72,000

Corporations can deduct charitable contributions up to 10% of their total modified taxable income for the year:

$72,000 x 10% = $7,200

since the contributions made during this year exceeded the limit by $300, that will be the amount of the carryover for future years.

* Modified taxable income is the taxable income determined without regard to any base erosion tax benefit, i. e. total taxable income including any deductions made like DRD