### Question
How does Income Taxes define disqualified separately computed income?


### Answer
Under *26 U.S.C. § 1503*, **disqualified separately computed income** is defined as:

> 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**

