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Unformatted text preview: distributions in excess of accumulated earnings.
On personal holding companies.
Regardless of the number of stockholders in a corporation. CPA-02068
Choice "d" is correct. The imposition of the accumulated earnings tax does not depend on the number of
shareholders a corporation has.
Choice "a" is incorrect. Partnerships are not liable for the accumulated earnings tax, but most
corporations are potentially liable.
Choice "b" is incorrect. Corporations that make distributions in excess of accumulated earnings are not
liable for the accumulated earnings tax. There would be no accumulated earnings left to tax.
Choice "c" is incorrect. Personal holding companies are not liable for the accumulated earnings tax. CPA-02070 Type1 M/C A-D 27. CPA-02070 ARE Nov 95 #19 Corr Ans: C PM#37 R 3-01 Page 39 The following information pertains to Dahl Corp.:
Accumulated earnings and profits at January 1, 1994
Earnings and profits for the year ended December 31, 1994
Cash distributions to individual stockholders during 1994 $120,000
360,000 What is the total amount of distributions taxable as dividend income to Dahl's stockholders in 1994?
$360,000 CPA-02070 Explanation
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