Delta corporation owns 2% of the stock in a U.S. corporation Azul. It receives a dividend from that corporation of $100,000. Delta has $3 million of taxable income not including the dividend from Azul.

a) Suppose that before the dividends Delta had a taxable loss from all other activities of ($40,000). How much gross income from the dividend does Delta report?

b)What if Deltas taxable loss before dividends was ($55,000) would your answer change and if so how?