Hi, In this solution when calculating I-E the examiner's report adds the share of dividend income into the I, and then does the min profits test. But in the notes it says that dividends will usually be excluded from I as they will be included in the trade profits and so to prevent double taxing. Is it the case that: dividend income will be added to I for the purposes of the min profits test if min profits test bites, the trading profit is the taxable amount, and dividends will already be included in the stated value if it doesnt bite, I-E is the taxable amount and dividend amount should remain included in I so that it is taxed? Or when should dividend income be excluded from I? Thanks for the help!
Hi The dividend income is added to the I-E result because it is included in the minimum profit and so the comparison is fair. Another approach would be to not add it to I-E and compare it to an adjusted minimum profit which excludes the dividend income. Either way, you would get the same result. Please see the end of the following post: https://www.acted.co.uk/forums/index.php?threads/min-profit-test.18027/#post-71731 Thanks
