2008 CCH Comp Topics Ch18

2008 CCH Comp Topics Ch18 - Chapter 18 Accumulated Earning...

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Unformatted text preview: Chapter 18 Accumulated Earning and Personal Holding Company Taxes 2007 CCH. All Rights Reserved. 4025 W. Peterson Ave. Chicago, IL 60646-6085 1 800 248 3248 www.CCHGroup.com CCH Federal Taxation Chapter 18 Exhibits Chapter 18, Exhibit Contents 1. Accumulated Earning Tax (AET)Overview 2. AET Base ComputationAccumulated Taxable Income 3. AET Base ComputationDividends-Paid Deduction 4. AET Base ComputationAccumulated Earnings Credit (AEC) 5. Personal Holding Company Tax (PHC Tax) 6. Undistributed PHC Income ComputationSpecific Adjustments to Taxable Income 7. Undistributed PHC Income Computation-Dividends-Paid Deduction CCH Federal Taxation Accumulated Earning Tax (AET)Overview Definition. The AET is a 15% penalty tax imposed on corporations that accumulate earnings and profits above and beyond reasonable business needs. Purpose. To prevent C corporations from avoiding income tax at the shareholder level by accumulating rather than distributing excess earnings and profits. Excluded corporations include: S corporations Personal holding companies Passive foreign investment companies Tax-exempt organizations Chapter 18, Exhibit 1a CCH Federal Taxation Determination. AET liability is generally determined by the IRS only on an audit. A corporation does not file a form to compute AET with its annual income tax return. AET Base. The 15-percent accumulated earnings tax is imposed on a corporation's accumulated taxable income. Accumulated Earning Tax (AET)Overview Chapter 18, Exhibit 1b CCH Federal Taxation AET Base ComputationAccumulated Taxable Income Accumulated taxable income is a corporation's taxable income, with certain adjustments, minus the dividends-paid deduction and accumulated earnings credit. Chapter 18, Exhibit 2a CCH Federal Taxation AET Base ComputationAccumulated Taxable Income Specific Adjustments to Taxable Income. NOLs. Add back any deduction that reduced taxable income. DRD. Add back dividends-received deductions that reduced taxable income....
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This note was uploaded on 10/23/2009 for the course ACCTG 16 taught by Professor Juliekim during the Summer '09 term at Santa Monica.

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2008 CCH Comp Topics Ch18 - Chapter 18 Accumulated Earning...

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