Which of the Following Is Not a Permissible Reason for a Regular

question 26

Multiple Choice

Which of the following is not a permissible reason for a regular corporation to accumulate earnings at the entity level and avoid the imposition of the accumulated earnings tax?

• A) To construct a new plant facility in connection with expanding the corporation's business into a new geographic region
• B) To accumulate a fund of cash with which to pay off long-term debt due in twenty years
• C) To fund the development of a new product line
• D) To invest in the stock of an unrelated company to take advantage of the dividends received deduction

---

Definitions:

Pleiotropic Genes

Genes that have an effect on multiple, seemingly unrelated phenotypic traits, reflecting the complexity of gene expression in organisms.

Phenotype

The set of observable characteristics or traits of an organism resulting from the interaction of its genotype with the environment.

Black Hair

A hair color type characterized by the presence of eumelanin, resulting in a darker shade.

Genotype

The genetic makeup of an organism, consisting of both the visibly expressed traits and those not readily observable.