Final answer:
The Dividends Received Deduction (DRD) is not included in the calculation of a corporation's Net Operating Loss (NOL) because it is designed to prevent double taxation and does not contribute to a corporation's loss.
Step-by-step explanation:
The Dividends Received Deduction (DRD) is not includable when calculating a Net Operating Loss (NOL) for a corporation. The DRD is specifically designed to prevent double taxation of dividend income when it is received by a corporation.
Since NOL calculations involve determining the amount of loss that can be carried to other tax years to offset taxable income, non-taxable income such as DRD does not contribute to this loss and therefore must be added back when computing the NOL.
A company calculates its NOL by taking its gross income and subtracting its allowable deductions (excluding the DRD). The NOL can then be carried back or carried forward to other tax years, providing a tax benefit by reducing taxable income in those years.