Last year, Acorn Inc., (a calendar year taxpayer) had the following items of income and expense:

Net Sales $300,000

Cost of sales and Operating Expenses 275,000

Dividends received from Tree Corporation (not included above) 25,000

Charitable contributions (not included above) 15,000

a) Acorn Inc. owns 23% of Tree Corporation. Calculate the taxable income from last year and state any carryovers available and applicable IRC sections.

b) Would your answer change if the company owned 18% of Tree Corporation? Explain using calculations, carryovers and applicable IRC sections