Special Corporate Deductions

Question 1

What are the charitable contribution rules for corporations?

Answer 1

• Deduction is lower of:
  1) AB of property + 50% (FMV-AB) or
  2) 2 x AB
• Limit on deduction is 10% of taxable income before deductions for charitable contributions, DRD, or carryovers
• Any excess carries forward for 5 years

Question 2

What cannot claim the DRD?

Answer 2

-S Corporations, PSCs, nor PHCs

Question 3

What is the minimum holding period for DRD to prevent dividend stripping?

Answer 3

-46 days

Question 4

What are the provisions of the Domestic Production Deduction?

Answer 4

• Equal to 9% of lower of 1) qualified production activity income or 2) taxable income
• Deduction may not exceed 50% of wages allocable to domestic production income

Question 5

What is the order for corporate deductions?

Answer 5

1) Gross income
2) Deductions
3) Charitable contributions
4) Dividends Received Deduction
5) Domestic Production Deduction, NOL, STCL