Organizational Tax Research and Planning-Chapter 5

Organizational Tax Research and Planning-Chapter 5 -...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Organizational Tax Research and Planning-Acc565 Chapter 5 Problems C: 5-42 Regular Taxable income 150,000.00 Plus: Depreciati on 30,000.00 Adj. to Gain on Sale of Equipmen t (9,000.00) Preadjust ment AMTI 171,000.00 Adjusted Current Earnings 340,0 00.00 Minus PAMTI (171,000.0 0) Excess Amount 169,000. 00 Percentag e Inclusion 75% 126,750.00 AMITI 297,750.0 0 Minus: Statutory Exemptio n 40,000 .00 36,937.00 Phase-out (3,063.0 0) AMT base 294,687.00 Time tax rate 0.20 Tentative minimum tax before credits 58,937.40
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Minus: Regular Tax Rate (41,750.00) AMT 17,187.4 0 b. Is any minimum tax credit carryback or carryover available? If so, to what years? Yes, the AMT tax is eligible for the minimum tax credit for corporations and it can be used indefinitely in future years. C: 5-55 a. What is Moore’s regular tax liability (ignoring any AMT implications)? Moore’s regular tax liability is (22,250 + (100,000 * .39)) = $61,250 b. What is Moore’s PHC tax liability? Taxable Income 200,00 0.00 Plus: Dividends
Background image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: received 35,000.00 Minus: Dividends paid (75,000.00) Federal Taxes (61,25 0.00) Undistribut ed PHC Income 98,750.00 Times: Tax Rate 15% Personal Holding Company Tax $14,812. 50 c. What measures can Moore take to eliminate its PHC tax liability after year-end and before it files its tax return? After it files its tax return? Moore can eliminate its PHC tax liability by changing the corporation’s stock ownership by issuing nonvoting preferred stock to unrelated parties without diluting the voting power of the current common stock. They can also reduce dividend payments which will reduce their tax base. After it files its tax return, Moore pay dividends sufficient to reduce the amount of PHCI to 10% or less of ordinary gross income. A second alternative after taxes would be to make an S Corporation election because S corporations are exempt from PHC taxes and it would eliminate the double taxation of dividends....
View Full Document

This note was uploaded on 10/22/2011 for the course ACCOUNTING ACC565 taught by Professor Lindachess during the Spring '10 term at Strayer.

Page1 / 2

Organizational Tax Research and Planning-Chapter 5 -...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online