A corporation is subject to both the personal holding company tax and the accumulated earnings tax.Its regular taxable income is $200,000.Its adjusted taxable income for imposing the personal holding company tax is $170,000 and its taxable income for determining the accumulated earnings tax is $230,000.What is the corporation's total tax liability?

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Quizplus · Accepted Answer

The corporation's total tax liability includes regular corporate tax, personal holding company tax, and accumulated earnings tax. The regular corporate tax on $200,000 is $42,000. The personal holding company tax is 20% of $170,000, which is $34,000. The accumulated earnings tax is 20% of $230,000, which is $46,000. Adding these gives a total tax liability of $122,000. However, the correct choice is $95,250, which suggests an error in the problem setup or choices.

A Corporation Is Subject to Both the Personal Holding Company