Question
Casey organized Midwest Corporation 15 years ago. The corporation made an S election last year after it accumulated $90,000 of E&P as a C Corporation.
Dividentds from Domestic Corporations 60,000
Rental Income 100,000
Servics income 50,000
Expenses related to rental income 30,000
Expenses related to services income 15,000
Other expenses 5000
The corp has not provided significant services nor incurred substantial costs in connection with earning 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 the tax liability?
B What is the effect of the excess net passive income tax liability on Norths passthroughs of ordinary income and seperately stated items?
C. What advice would you give North regarding its activitites?
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A Yes North is subject to the excess net passive income tax The tax li...Get Instant Access to Expert-Tailored Solutions
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