Identify which of the following statements is true.
A)Consent dividends are cash dividends paid following an authorizing vote of the shareholders.
B)Dividends that are paid in the two preceding tax years can be used as a dividend carryover to reduce the amount of the current year's personal holding company (PHC)tax liability.
C)Dividends paid by a personal holding company in the first 2 1/2 months of a tax year are automatically throwback dividends.
D)All of the above are false.

Question

Quizplus · Accepted Answer

Dividend carryover is a legitimate strategy used to offset the amount of PHC tax payable. It involves using dividends paid in the two years preceding the tax year as a deduction against the PHC tax liability. Consent dividends and throwback dividends are not legitimate strategies for reducing PHC tax liability.

Identify Which of the Following Statements Is True