During a Recent IRS Audit, the Revenue Agent Decided That

question 87

Multiple Choice

During a recent IRS audit, the revenue agent decided that Roger used his closely-held corporation, Dodger Inc., to avoid shareholder tax by accumulating earnings beyond the reasonable needs of the business. Dodger's taxable income for the year was $500,000, and it paid no dividends. Compute Dodger's accumulated earnings tax, assuming that it had accumulated $2 million after-tax income in prior years.

• A) $100,000
• B) $400,000
• C) $50,000
• D) $0

---

Definitions:

Ready for Death

A state of being emotionally or spiritually prepared for the end of life.

Legal Definition

A precise and formal explanation of the meaning of a legal term or concept.

Brain Functioning

The activities and processes that occur in the brain, including thought, emotion, and coordination of physical movements.

U.S. States

U.S. States are the fifty administrative divisions of the United States, each with its own government and jurisdiction under the federal system.