Question

a. In 2012 Sweetwater's excess net passive income is $42,000. Sweetwater holds $31,000 of accumulated earnings and profits from a C corporation year. It reports $58,000 of taxable income and AMT adjustments of $17,000 for the year. Calculate any passive investment income tax penalty.
b. In part (a), what if taxable income were $39,000?
c. If this will be the third consecutive year the company may be subject to the penalty tax on excessive passive investment income, what could Sweetwater do before the end of year to avoid the tax?



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  • CreatedAugust 05, 2013
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