### Question
Can you define what disqualified separately computed income means?


### Answer
**Disqualified separately computed income** is defined as the following in *26 U.S.C. § 1503*:

> the portion of the separately computed taxable income of the subsidiary which does not exceed the dividends distributed by the subsidiary during the taxable year on applicable preferred stock

#### Citation:
  - *26 U.S.C. § 1503*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 6-CONSOLIDATED RETURNS > Subchapter A-Returns and Payment of Tax**

