Question 3 (8 marks)

1. For 2018, Harvest Ltd. has taxable income before the dividend received deduction of $100,000. Included in the calculation of the $100,000 are $60,000 in dividends from Crop Corp., a $4,000 NOL carry-back, and an $8,000 capital loss carry-back. Harvest owns 10 percent of Crop Corp. i) Calculate the dividend received deduction for Harvest.

ii) Assume that everything is the same as in part (i), except that Harvests taxable income before the dividend received deduction is $40,000. Calculate the dividend received deduction for Harvest.

2. For 2018, Crop Corp. had taxable income before the dividend received deduction of $48,000. Included in the calculation of the $48,000 are $60,000 of dividends from Seed Corp. Crop Corp. owns 35 percent of Seed Corp. i) Calculate the dividend received deduction for Crop. ii) Assume that everything is the same as in part (i), except that taxable income before the dividend received deduction is $35,000. Calculate the dividend received dividend for Crop.