Which of the Following Statements Regarding the Accumulated Earnings Tax

question 101

Multiple Choice

Which of the following statements regarding the accumulated earnings tax is correct in 2008?

• A)If Blue, Inc.'s accumulated taxable income for 2008 is $180,000, the calculated accumulated earnings tax liability would be $53,450 [($50,000 * 15%) + ($25,000 * 25%) + ($25,000 * 34%) + ($80,000 * 39%)].
• B)Blue, Inc., calculates accumulated taxable income for 2008 of $100,000. Therefore, it should increase the amount paid to the IRS for 2008 by $15,000 ($100,000 * 15%).
• C)The accumulated earnings tax applies to C corporations, but applies to S corporations at only the shareholder level.
• D)The tax rate for the accumulated earnings tax of 35% is the same as the highest tax bracket for the corporate taxpayer.
• E)None of the above.

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Definitions:

Consumer Surplus

The difference between the maximum amount a consumer is willing to pay for a good or service and the amount they actually pay.

Demand Curve

A visual diagram that illustrates the connection between a product's price and the amount consumers want to purchase.

Paired-comparison Method

A technique used in assessment and decision-making that involves comparing each option with every other option in pairs to judge which is preferable.

Performance Appraisal

A regular review of an employee’s job performance and overall contribution to a company, typically involving feedback and discussions on areas of strength and areas needing improvement.