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