Example. For the calendar year 1981, the X corporation has a gross income of $400,000 and total deductions allowed by chapter 1 of the Code of $375,000 exclusive of any net operating loss deduction and exclusive of any deduction for dividends received or paid. Corporation X in 1981 received $100,000 of dividends entitled to the benefits of section 243(a). These dividends are included in Corporation X's $400,000 gross income. Corporation X has no other deductions to which section 172(d) applies. On the basis of these facts, Corporation X has a net operating loss for the year 1981 of $60,000, computed as follows:
Deductions for 1981 | $375,000 |
Plus: Deduction for dividends received, computed without regard to the limitation provided in section 246(b) (85% of $100,000) | 85,000 |
Total | 460,000 |
Less: Gross income for 1981 (including $100,000 dividends) | 400,000 |
Net operating loss for 1981 | 60,000 |
26 C.F.R. §1.172-2