Dozen Corporation Is Owned Equally by Twelve Unrelated Individuals

question 41

Multiple Choice

Dozen Corporation is owned equally by twelve unrelated individuals.Its taxable income this year is $100,000 and its regular federal income tax liability is $21,000.The company claims a $20,000 dividends-received deduction and pays $25,000 dividends to its shareholders.The corporation had accumulated earnings and profits of $900,000 at the end of the preceding year.The company has not documented any business needs for the accumulated profits.The accumulated earnings tax is

• A)$19,000.
• B)$10,800.
• C)$14,800.
• D)$19,800.

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Definitions:

Derivative Instruments

Financial contracts whose value is derived from the value of an underlying asset, index, or interest rate.

Primary Instruments

The basic securities in the financial market, such as stocks and bonds, that are traded directly between entities.

AASB 9

An Australian Accounting Standards Board regulation that addresses the classification, measurement, and recognition of financial assets and financial liabilities.

Trade Debtors

Individuals or entities who owe money to a company from goods or services provided on credit.