Staff,Inc. ,has taxable income of $10 million in 2010.What is the maximum DPAD tax savings for this C corporation?

Question

Quizplus · Accepted Answer

DPAD tax savings is applicable to C corporations engaged in qualified production activities. The maximum DPAD tax savings is 9% of the lesser of qualified production activities income or taxable income. In this case, if all of the taxable income is qualified production activities income, the maximum DPAD tax savings would be $900,000 (9% of $10 million). However, since the question does not specify the amount of qualified production activities income, the maximum DPAD tax savings would be 9% of $10 million, which is $900,000. However, the DPAD is limited to 50% of the W-2 wages paid by the corporation, which could lower the maximum DPAD tax savings. But since the question does not provide information on W-2 wages, we assume this limitation does not apply. Therefore, the correct answer is D.

Staff,Inc ,Has Taxable Income of $10 Million in 2010