A corporation that can demonstrate that its

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Unformatted text preview: Dart has accumulated taxable income for 1994. Which step(s) can Dart take to eliminate or reduce any 1994 accumulated earnings tax? I. Demonstrate that the "reasonable needs" of its business require the retention of all or part of the 1994 accumulated taxable income. II. Pay dividends by March 15, 1995. a. b. c. d. I only. II only. Both I and II. Neither I nor II. CPA-02060 Explanation Choice "c" is correct. Dart can take both actions to eliminate or reduce any 1994 accumulated earnings tax. A corporation that can demonstrate that its reasonable business needs require it to accumulate earnings can escape the accumulated earnings tax on the portion reasonably accumulated. Dividends paid by the 15th day of the third month after the close of the corporation's tax year reduce the accumulated earnings subject to the accumulated earnings tax. Choices "a", "b", and "d" are incorrect. Each of these answers treats either I or II (or both) incorrectly. CPA-02061 Type1 M/C A-D Corr Ans: D PM#32 R 3-01 22. CPA-02061 PII Nov 92 #17 Page 28...
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This note was uploaded on 06/14/2013 for the course ACCOUNTING Regulation taught by Professor Becker during the Fall '10 term at Keller Graduate School of Management.

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