Grackle Corporation, a personal service corporation, had $230,000 of net active income, $40,000 of portfolio income, and a $250,000 passive activity loss during the year. How much is Grackle's taxable income?
A) $20,000
B) $40,000
C) $270,000
D) $520,000
E) None of the above

Question

Quizplus · Accepted Answer

Only the net active income is subject to the personal service corporation tax rate. Therefore, Grackle's taxable income would be $230,000 + $40,000 - $250,000 = $20,000, which falls under the 15% tax bracket for personal service corporations.

Grackle Corporation, a Personal Service Corporation, Had $230,000 of Net