Excess net passive income of an S corporation is $70,000 and its taxable income is $60,000.Assuming that there is $80,000 of accumulated earnings and profits from a C corporation year, calculate any passive income penalty tax.

Question

Quizplus · Accepted Answer

The passive income penalty tax is calculated as 21% of the lesser of excess net passive income ($70,000) or taxable income ($60,000). Therefore, the tax is 21% of $60,000, which equals $12,600.

Excess Net Passive Income of an S Corporation Is $70,000