Which of the Following Statements Regarding the Accumulated Earnings Tax

question 45

Multiple Choice

Which of the following statements regarding the accumulated earnings tax is correct in 2011?

• A) If Blue, Inc.'s accumulated taxable income for 2011 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 2011 of $100,000. Therefore, it should increase the amount paid to the IRS for 2011 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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