Which of the following statements regarding the accumulated earnings tax is correct in 2010?
A)If Blue,Inc.'s accumulated taxable income for 2010 is $180,000,the calculated accumulated earnings tax liability would be $53,450 [($50,000 ´ 15%)+ ($25,000 ´ 25%)+ ($25,000 ´ 34%)+ ($80,000 ´ 39%)].
B)Blue,Inc. ,calculates accumulated taxable income for 2010 of $100,000.Therefore,it should increase the amount paid to the IRS for 2010 by $15,000 ($100,000 ´ 15%).
C)The accumulated earnings tax applies to C corporations,but applies to S corporations at only the shareholder level.
D)The tax rate for the accumulated earnings tax of 35% is the same as the highest tax bracket for the corporate taxpayer.
E)None of the above.

Question

Quizplus · Accepted Answer

The accumulated earnings tax rate in 2010 was 15%, not 35%, and it applies only to C corporations, not S corporations. The calculations in options A and B are incorrect.

Which of the Following Statements Regarding the Accumulated Earnings Tax