Dozen Corporation is owned equally by twelve unrelated individuals.Its taxable income this year is $100,000 and its regular federal income tax liability is $22,250.The company claims a $20,000 dividends-received deduction and pays $25,000 dividends to its shareholders.The corporation had accumulated earnings and profits of $900,000 at the end of the preceding year.The company has no reasonable needs of the business.The accumulated earnings tax is
A)$7,913.
B)$10,913.
C)$14,550.
D)$13,188.

Question

Quizplus · Accepted Answer

C)
 11ea7cb8_54c3_3f87_928c_a98e7ec171e4_TB1258_00 There is no accumulated earnings credit in this problem.The accumulated earnings credit is the greater of $0 ($250,000 - $900,000)or $0 for reasonable business needs.

Dozen Corporation Is Owned Equally by Twelve Unrelated Individuals