Assume that Clampett, Inc., has $200,000 of sales, $150,000 of cost of goods sold, $60,000 of interest income, and $40,000 of dividends.What is Clampett, Inc.'s excess net passive income?

Question

Quizplus · Accepted Answer

Excess net passive income is calculated as passive income minus passive deductions. Here, passive income is $60,000 (interest income), and passive deductions are $40,000 (dividends). Thus, excess net passive income is $60,000 - $40,000 = $20,000. However, since the question asks for excess net passive income, we must consider the limit based on sales. The limit is 25% of sales, which is $50,000 (25% of $200,000). Since $20,000 is less than $50,000, the excess net passive income is $20,000.

Assume That Clampett, Inc