Question C. Where did $65,000 and $5000 come from? Please explain question C and how you found the answer.

Self-Study Problem 11.3

a. During 2021, Fraxinia Corporation has the following income and expenses:

Gross income from operations, excluding dividends	$90,000
Expenses from operations	100,000
Dividends received from a 25 percent-owned domestic corporation	$70,000

Below is the Dividends Received Deduction table to use for this problem.

Percent Ownership	2021 Dividends Received Percentage
Less than 20 percent	50%
20 percent or more, but less than 80 percent	65%
80 percent or more	100%

Calculate the amount of Fraxinia Corporation's dividends received deduction.

b. Boyce Inc., a calendar year corporation, incurred organizational costs of $13,000 and start-up costs of $52,000 in 2021. Boyce started business on August 3, 2021. What is the maximum deduction for organizational and start-up costs for Boyce in 2021 and what is Boyces 2022 deduction for the same costs? Round any division to two decimal places and round your final answer to the nearest dollar.

Organizational costs: 2021 deduction is $5,222.

2022 deduction is $533.

Start up costs: 2021 deduction is $ 4,361. 2022 deduction is $ 3,267.

c. Gant Corporation has income in 2021 of $65,000 after a dividends received deduction of $5,000 and a charitable contribution of $25,000. What is the deductible amount of the charitable contribution? $

When a corporation owns stock in another corporation, income earned by the first corporation could be taxed at least three times in the absence of a special provision.

To mitigate this potential for triple taxation of corporate earnings, corporations are allowed a deduction for all or a portion of dividends received from domestic corporations. Corporations are entitled to a dividends received deduction based on their percentage of ownership in the corporation paying the dividend.

A corporation may take a deduction for qualified startup and organizational expenses, with special provisions in the first year.

Corporations deduction for charitable contributions is subject to a limitation.