The Great Big Cookie Corp.(GBCC) is a Canadian controlled private corporation which realized a total net income for tax purposes of $230,000 in 2020.During the year, GBCC received $25,000 in dividends from a taxable Canadian corporation during the year, and they also donated $15,000 to a registered charity.What is GBCC's taxable income in 2020?
A)$190,000
B)$205,000
C)$215,000
D)$240,000

Question

Quizplus · Accepted Answer

The taxable income is calculated as the net income minus the dividend received deduction and the charitable donation deduction. The dividend received deduction is 50% of the dividends received, which is $12,500. The charitable donation deduction is the lesser of 75% of net income before the deduction or $200,000, which is $15,000. Therefore, the taxable income is $230,000 - $12,500 - $15,000 = $202,500.