An S Corporation with Substantial AEP Records Operating Revenues of $410,000

question 31

Multiple Choice

An S corporation with substantial AEP records operating revenues of $410,000, taxable interest income of $390,000, operating expenses of $260,000, and deductions attributable to the interest of $150,000. The passive income penalty tax payable, if any, is:

• A)$0.
• B)$40,923.
• C)$116,923.
• D)$136,500.

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Definitions:

Break-even Point

The level of production or sales at which total costs match total revenue, resulting in no profit or loss.

Fixed Cost

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance premiums.

Unit Price

The cost of a single unit of a product, allowing consumers to compare the prices of items sold in different sizes or quantities.

Unit Variable Cost

The cost associated with producing one additional unit of a product, including labor, material, and other variable costs.