McGraw-Hill's Taxation of Business Entities 3rd Edition by Connie Weaver, Brian Spilker, Edmund Outslay, John Robinson, Ronald Worsham, Benjamin Ayers, John Barrick

Exercise 50

Wasatch Corp. (WC) received a $200,000 dividend from Tager Corporation (TC). WC owns 15 percent of the TC stock. Compute WC's deductible DRD in each of the following situations:
a. WC's taxable income (loss) without the dividend income or the DRD is $10,000.
b. WC's taxable income (loss) without the dividend income or the DRD is ($10,000).
c. WC's taxable income (loss) without the dividend income or the DRD is ($59,000).
d. WC's taxable income (loss) without the dividend income or the DRD is ($61,000).
e. WC's taxable income (loss) without the dividend income or the DRD is ($500,000).
f. What is WC's book-tax difference associated with its DRD in part a Is the difference favorable or unfavorable Is it permanent or temporary