Daisy,Inc,has Taxable Income of $850,000 During 2008,its First Year of Operations

question 45

Essay

Daisy,Inc.,has taxable income of $850,000 during 2008,its first year of operations. Daisy distributes dividends of $200,000 to its 10 shareholders (i.e.,$20,000 each). Daisy earmarks $361,000 of its earnings for potential future expansion into other cities.
a.Calculate Daisy's total tax liability associated with the current tax year if the $361,000 is treated as representing reasonable needs of the business.
b.Calculate Daisy's total potential tax liability associated with the current tax year if none of the $361,000 qualifies as reasonable needs of the business.

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