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.Assume that Clampett,Inc.has $1,000 of earnings and profits from prior C corporation years and that the corporate tax rate is 35%.Clampett,Inc.'s taxable income would have been $122,000 this year if it had been a C corporation.What is Clampett,Inc.'s excess net passive income tax?

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Quizplus · Accepted Answer

The excess net passive income tax is calculated as follows:Excess net passive income = Interest income + Dividends - 25% of taxable income= $60,000 + $40,000 - 25% x $122,000= $100,000 - $30,500= $69,500Excess net passive income tax = 35% x $69,500= $24,325However, Clampett, Inc. has $1,000 of earnings and profits from prior C corporation years. This means that the excess net passive income tax is reduced by $1,000.Therefore, Clampett, Inc.'s excess net passive income tax is $24,325 - $1,000 = $23,325.

Assume That Clampett,Inc