An S corporation with substantial AEP has operating revenues of $410,000,taxable interest income of $390,000,operating expenses of $260,000,and deductions attributable to the interest of $150,000.The possible investment income penalty tax payable is:

Question

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ENPI = (Net Passive Income/PII)F1F1F1S1F1F1F10 (PII - 25% GR)
ENPI = [($390,000 - $150,000)/$390,000] F1F1F1S1F1F1F10 [$390,000 - (25% F1F1F1S1F1F1F10 $800,000)]
ENPI = ($240,000/$390,000)F1F1F1S1F1F1F10 $190,000
ENPI = $116,923
Since taxable income of $390,000 is more than ENPI,the § 1375 tax is $116,923 F1F1F1S1F1F1F10 35%,or $40,923.

An S Corporation with Substantial AEP Has Operating Revenues of $410,000,taxable