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Unformatted text preview: Income Tax II Name __Christian Yimgnia _________ Chapter18 Questions Explain and/or discuss the following based on reading the chapter and viewing the power points. Be thorough with your answers. You may take all the space you need. 1. What is the accumulated earnings tax and how is it calculated? The accumulated earnings tax is one that stimulates dividend distribution to shareholders and enforces double taxation rather than accumulated the income and shelter shareholders from the individual income tax the personal income tax they would have to pay if the income were distributed to the shareholders as dividends. The accumulated earnings tax is imposed on accumulated earnings beyond reasonable business needs. The amount is computed by multiplying the corporation’s accumulated taxable income by 15%. And a corporation’s accumulated taxable income for a tax year is its taxable income, with adjustments, less its accumulated earnings credit and dividends paid deduction....
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- Spring '11