Redbird Corporation, a calendar year taxpayer, receives dividend income of $250,000 from a corporation in which it holds a 10% interest.

Redbird Corporation, a calendar year taxpayer, receives dividend income of $250,000 from a corporation in which it holds a 10% interest. Redbird also receives interest revenue of $35,000 from municipal bonds. (The municipality used the proceeds from the bond issue to construct a library.) Redbird borrowed funds to purchase the municipal bonds and pays $20,000 of interest on the loan. Excluding the items noted above, Redbird's taxable income in $500,000.