A C Corporation owns 30% of the voting stock of a domestic corporation. The C Corporation received $10,000 in dividends from this investment. The C Corporation's taxable income before the dividends received deduction (DRD) was $8,000. What is the allowable DRD?

Ownership is 20%-80%, so the DRD rate is 65%. Tentative DRD = $10,000 * 65% = $6,500. Limitation: DRD cannot exceed 65% of Taxable Income (before DRD). Limit = $8,000 * 65% = $5,200. Since taking the full $6,500 would not create a Net Operating Loss ($8,000 - $6,500 > 0), the limitation applies. Allowable DRD is $5,200.