Oliver organized North Corporation 15 years ago. The corporation made an S election last year after it
Question:
Dividends from domestic corporations ………………….. $ 60,000
Rental income ……………………………………………. 100,000
Services income …………………………………………. 50,000
Expenses related to rental income …………………......... 30,000
Expenses related to services income …………………..... 15,000
Other expenses …………………………………………... 5,000
The corporation has not provided significant services nor incurred substantial costs in connection with earning the rental income. The services income is derived from the active conduct of a trade or business.
a. Is North subject to the excess net passive income tax? If so, what is its tax liability?
b. What is the effect of the excess net passive income tax liability on North’s pass- through of ordinary income and separately stated items?
c. What advice would you give North regarding its activities?
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Federal Taxation 2016 Comprehensive
ISBN: 9780134104379
29th Edition
Authors: Thomas R. Pope, Timothy J. Rupert, Kenneth E. Anderson
Question Posted: