Howard Corporation conducts a manufacturing business and has a compelling need to accumulate earnings. Its January 1,
Question:
Howard Corporation conducts a manufacturing business and has a compelling need to accumulate earnings. Its January 1, E&P balance is $600,000. It reports the following operating results for the current year:
Other information relating to Howard's current year operations is as follows:
NOL carryover from last year deducted in the current year . . . . . . . . . . $100,000
Net capital gain . . . . . . . . . . . . . . . . .. .. . . . . . . . . . . .. . . . . . . . . .. . . . . . . 100,000
Dividends received from 10%-owned domestic corporation . . . . . . . . . 75,000
Current year E&P before dividend payments is $400,000. Howard can justify the retention of $120,000 of current E&P to meet the reasonable needs of its business.
a. What is Howard's accumulated taxable income?
b. What is Howard's accumulated earnings tax liability?
CorporationA 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...
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Global Taxation How Modern Taxes Conquered The World
ISBN: 9780192897572
1st Edition
Authors: Philipp Genschel, Laura Seelkopf