Mullins Corporation Is Classified as a PHC for the Current

question 72

Essay

Mullins Corporation is classified as a PHC for the current year,reporting $263,000 of taxable income on its federal income tax return: Actual charitable contributions made by Mullins Corporation were $75,000.What are the federal income tax due and the personal holding company (PHC)tax liability? Discuss the methods (if any)by which payment of the PHC tax can be avoided.

---

Definitions:

Allowance for Doubtful Accounts

Allowance for doubtful accounts is a financial accounting provision made for receivables that may not be collectible, estimating the portion of outstanding receivables likely to be uncollectable.

Credit Balance

A situation where the amount of credits in an account exceeds the debits, often seen as a positive balance in financial and bank accounts.

Outstanding Receivables

The amount of money owed to a company by its customers for goods or services that have been delivered or used but not yet paid for.

Net Realizable Value

The estimated selling price of goods minus the cost of their sale or completion.