Eagle,IncRecognizes That It May Have an Accumulated Earnings Tax Problem

question 84

Essay

Eagle,Inc.recognizes that it may have an accumulated earnings tax problem.According to its calculation,Eagle anticipates it has accumulated taxable income,before reduction for dividends paid,of $600,000 in 2008.Assume that its shareholders are in the 35% marginal tax bracket.
a.Calculate the maximum amount of tax that Eagle and its shareholders might pay if the accumulated earnings tax is assessed.
b.Calculate the maximum amount of tax that Eagle and its shareholders might pay if it distributes dividends to prevent an accumulated earnings tax assessment from occurring.

---

Definitions:

Neutral Stimulus

A stimulus that initially produces no specific response other than focusing attention, until it becomes associated with an unconditioned stimulus through classical conditioning.

Classical Conditioning

A learning process that occurs through associations between an environmental stimulus and a naturally occurring stimulus.

Negative Reinforcement

Increasing behaviors by stopping or reducing negative stimuli. A negative reinforcer is any stimulus that, when removed after a response, strengthens the response. (Note: negative reinforcement is not punishment.)

Latent Learning

Learning that occurs but is not apparent until there is an incentive to demonstrate it.