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 $21,000.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 not documented any business needs for the accumulated profits.The accumulated earnings tax is

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The accumulated earnings tax is calculated on the taxable income minus dividends paid and the dividends-received deduction. Here, $100,000 - $25,000 - $20,000 = $55,000. The accumulated earnings credit is $250,000 for a corporation, so $55,000 is subject to the accumulated earnings tax. The tax rate is 20%, so $55,000 * 20% = $11,000. However, the regular tax liability of $21,000 is subtracted from this, resulting in $14,800.

Dozen Corporation Is Owned Equally by Twelve Unrelated Individuals