A corporation is classified as a personal holding company.Its taxable income is $300,000 and its regular federal income tax liability is $63,000.The company claims a $40,000 dividends-received deduction and pays $30,000 dividends to its shareholders.The personal holding company tax is

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The personal holding company tax is calculated as 70% of the undistributed personal holding company income (UPHCI). The UPHCI is calculated as the taxable income minus the dividends-received deduction minus the dividends paid to shareholders. In this case, the UPHCI is $300,000 - $40,000 - $30,000 = $230,000. The personal holding company tax is therefore 70% of $230,000, which is $161,000. However, the personal holding company tax cannot exceed 80% of the taxable income, which is $240,000 in this case. Therefore, the personal holding company tax is $240,000.

A Corporation Is Classified as a Personal Holding Company