The Dakota Corporation had a 2015 taxable income of $34,500,000 from operations

Question

The Dakota Corporation had a 2015 taxable income of $34,500,000 from operations after all operating costs but before (1) interest charges of $8,700,000; (2) dividends received of $770,000; (3) dividends paid of $5,350,000; and (4) income taxes.

Use the tax schedule in Table 2.3 to calculate Dakota

The Dakota Corporation had a 2015 taxable income of $34,500,000 from operations after all operating costs but before (1) interest charges of $8,700,000; (2) dividends received of $770,000; (3) dividends paid of $5,350,000; and (4) income taxes.

Explanation / Answer

a)The first 70 percent of the dividends received is not taxable. Thus, only 30 percent of the dividends received are taxed, so:

Taxable income = $34,500,000 - $8,700,000 + (.3)$770,000 = $26031000

Now Dakota Corp.

a)The first 70 percent of the dividends received is not taxable. Thus, only 30 percent of the dividends received are taxed, so:

Taxable income = $34,500,000 - $8,700,000 + (.3)$770,000 = $26031000

Now Dakota Corp.

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