Choice a is incorrect as the additional tax is self

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Unformatted text preview: alf of the tax year) corporation consists of "NIRD" that it is defined as a personal holding company, not over 50% (as in the selection). Choice "a" is incorrect, as the additional tax is self-assessed by the taxpayer by filing a separate schedule 1120PH along with the Form 1120. Choice "b" is incorrect, as the accumulated earnings tax indeed does not apply to personal holding companies (which are not allowed to accumulate any earnings without penalty!). Choice "d" is incorrect. Provided the net earnings are distributed, there is no penalty. CPA-01999 Type1 M/C 7. CPA-01999 ARE R02 #4 A-D Corr Ans: A PM#7 R 3-01 Page 19 Mock operates a retail business selling illegal narcotic substances. Which of the following item(s) may Mock deduct in calculating business income? I. Cost of merchandise. II. Business expenses other than the cost of merchandise. a. b. c. d. I only. II only. Both I and II. Neither I nor II. 4 © 2009 DeVry/Becker Educational Devel...
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