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 related expenses. Clampett, Inc.'s passive income is $60,000 (interest income) + $40,000 (dividends) = $100,000. The cost of goods sold is not related to passive income, so it is not deducted. Therefore, excess net passive income is $100,000 - $75,000 (50% of sales) = $25,000.

Assume That Clampett, Inc