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 21%.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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Clampett, Inc.'s excess net passive income tax is $5,250. This is calculated by taking the taxable income of $122,000 and subtracting the amount of income that is not subject to tax, which is $60,000 of interest income and $40,000 of dividends. This leaves $22,000 of taxable income, which is subject to a tax rate of 21%. This results in a tax liability of $4,620. However, Clampett, Inc. has $1,000 of earnings and profits from prior C corporation years, which can be used to offset the tax liability. This results in an excess net passive income tax of $5,250.

Assume That Clampett,Inc