C12-Chp-03-5-Worksheet-Acc Earn Penalty Tax

C12-Chp-03-5-Worksheet-Acc Earn Penalty Tax - -Excess...

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e37fcc0b50816fd006ab768bcff95cab1f7d0760.xls Page 1 of 1 ACCUMULATED EARNINGS TAX Local Manufacturing Corp. is not a member of a controlled group or an an affiliated group. Local reported the following results for the current year. Taxable Income $500,000 Federal Income Tax (34%) 170,000 Dividends paid in August of current year 75,000 The income above included: Long-term capital gains 30,000 Short-term capital gains 10,000 Dividends from 21% owned domestic corp. 100,000 Excess charitable contributions from prior year, deducted in current year. 25,000 E&P balance at start of year was $125,000. Company needs to retain $90,000 this year. Does the company owe the accumulated earnings tax? 535(a) 1 Taxable Income $500,000 2 Adjustments: 535(b)(3) + Dividends received deduction 80,000 535(b)(4) + Net Operating loss deduction (172) 535(b)(7) + Capital loss carryover 535(b)(2) + Contribution carryover 25,000 105,000 Subtotal 605,000 535(b)(1) - Income Taxes 170,000 535(b)(2)
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Unformatted text preview: -Excess Charitable Cont. (Ignore 170(b)(2)) 535(b)(5)-Capital loss deduction-Limited 535(b)(6)-Net capital gains 30,000 535(b)(7) Net of related taxes (10,200) Other (189,800) 532, 535 3 = Equals Adjusted Taxable Income 415,200 535(a), ( c)-Less: Dividends Paid 75,000 535(a), ( c)-Less: Credit ( Below - Line 6C or 6H) 125,000 (200,000) 535 4 = Equals: Accumulated Taxable Income 215,200 531 X Tax Rate 15% 5 = Accumulated Earnings Tax $32,280 535( c) 6 Compute Minimum Credit 535( c)(2) A + Min. Credit Amt - $250,000 or $150,000 250,000 535( c)(2) B-Less: Beginning Earnings and Profits 125,000 535( c)(2) C = Minimum Credit 125,000 Compute Needs-Based Credit 535( c)(1) D + Needs: Capital assets, debt etc 535( c)(1) E + Needs: Working Capital 535( c)(1) F = Reasonable Needs 90,000 535( c)(1) G-Less: Capital Gains net of tax-535(b)(6) (19,800) 535( c)(1) H = Needs Based Credit 70,200...
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