Problem $12-18($Algo$)[$LO $12-7]$

During a recent IRS audit, the revenue agent decided that the Parker family used their closely held corporation, Falco, to avoid

shareholder tax by accumulating earnings beyond the reasonable needs of the business. Falco's taxable income was $$820,000,$ it paid

no dividends, and it had no business need to retain income. Falco's marginal tax rate in prior years was $34$ percent.

Required:

a$.$ Compute Falco's accumulated earnings tax assuming that it had accumulated $$5$ million after$-$tax income in prior years.

b$.$ Compute Falco's accumulated earnings tax assuming that it had accumulated $$122,000$ after$-$tax income in prior years.

Complete this question by entering your answers in the tabs below.

Compute Falco's accumulated earnings tax assuming that it had accumulated $$5$ million after$-$tax income in prior years.

Note: Enter your answer in dollars and not in millions of dollars.

Accumulated earnings tax