A Manufacturing Corporation Is Owned Equally by 10 Unrelated Individuals

question 21

Essay

A manufacturing corporation is owned equally by 10 unrelated individuals.Its taxable income this year is $100,000 and its regular federal income tax liability is $22,250.The company claims a $15,000 dividends-received deduction and pays $25,000 dividends to its shareholders.The corporation had accumulated earnings and profits of $220,000 at the end of the preceding year.The company's reasonable needs of the business at the end of the year is $240,000.What is the amount of the accumulated earnings tax?

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Definitions:

Canadian Jurisdiction

The authority and power of Canadian courts and legal bodies to govern, interpret, and apply the law within Canada's geographic and legal boundaries.

Consumer Protection Act

Legislation designed to safeguard the rights of consumers by ensuring fair trade, accurate information and preventing fraud.

Competitive Markets

A market structure characterized by a large number of buyers and sellers, where no single entity can dictate prices or market conditions.

Informed Consumer Choice

The ability of a consumer to make a decision based on full information about product benefits, risks, and alternatives.