a. In 2020, VQQ Inc. received $350,000 in dividends from Cohen Labratories Inc. VQQ's taxable income before
Question:
a. In 2020, VQQ Inc. received $350,000 in dividends from Cohen Labratories Inc. VQQ's taxable income before the dividends received deduction (but including the dividend income) AND before a $30,000 charitable contribution deduction is $300,000. What is VQQ's DRD assuming it owns 15% of the Cohen Labratories Inc. stock, as well as its taxable income for 2020?
b. Is the DRD a temporary or permanent difference? Favorable or unfavorable? Will it create a deferred tax asset or liability? Briefly explain your answers.
c. Assume the corporation made $50,000 in charitable contributions but was allowed only the $30,000 deduction. Assuming VQQ expects to be profitable and have taxable income in future years, and that it does not plan to make any future charitable contributions, is this a temporary or permanent difference? Favorable or unfavorable? Will it create a deferred tax asset or liability? Briefly explain your answers.
South-Western Federal Taxation 2019 Comprehensive
ISBN: 9781337703017
42th edition
Authors: David M. Maloney, William A. Raabe, William H. Hoffman, James C. Young