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corporation is that, if all requirements are met, the corporation is not taxed on amounts distributed to its
Choice "c" is incorrect. The accumulated earnings tax is imposed on corporations whose accumulated
(retained) earnings is in excess of $250,000 if improperly retained instead of being distributed as
dividends to shareholders. Personal service corporations are entitled to only $150,000 of accumulated
Choice "d" is incorrect. A personal holding company is subject to regular corporate income tax on its
taxable income for the year. Taxable income is calculated without regard to distributions made to
shareholders. In addition, because the corporation is a personal holding company, it is subject to an
additional 15% tax on personal holding company income not distributed. CPA-02210 Type1 M/C 105. CPA-02210 A-D May 90 II #29 Corr Ans: C PM#11 R 3-99 Page 22 John Budd is the sole stockholder of Ral Corp., an accrual basis taxpayer engaged in wholesaling
operations. Ral's retained earnings at January 1, 1989 amounted to $1,000,000. For the year ended
December 31, 1989, Ral's book income, before federal income tax, was $3...
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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.
- Fall '10
- The Land