Questions from Federal Taxation

Q: The personal holding company tax and the accumulated earnings tax reflect efforts

The personal holding company tax and the accumulated earnings tax reflect efforts to prevent use of the corporate entity to avoid taxation. Explain the congressional intent behind these two tax measur...

Q: Which of the following corporate forms are exempt from the PHC tax

Which of the following corporate forms are exempt from the PHC tax? The accumulated earnings tax? a. Closely held corporations b. S corporations c. Professional corporations d. Tax-exempt organiza...

Q: Because of its quality investments, Carolina Corporation has always generated 30

Because of its quality investments, Carolina Corporation has always generated 30% to 40% of its gross income from passive sources. In the current year, Carolina sold a block of stock in a company it a...

Q: Which of the following income items, when received by a corporation

Which of the following income items, when received by a corporation, are included in personal holding company income (PHCI)? Indicate whether any special circumstances would exclude an income item tha...

Q: Grayson Corporation is a calendar year taxpayer. In the following independent

Grayson Corporation is a calendar year taxpayer. In the following independent situations, which of the pro rata dividends paid by Grayson during the current year are eligible for the dividends-paid de...

Q: Define the term consent dividend. How can a consent dividend be

Define the term consent dividend. How can a consent dividend be used to avoid the PHC and accumulated earnings taxes? In each case, what requirements must be met by the distributing corporation and/or...

Q: Explain the advantages of a deficiency dividend. What requirements must a

Explain the advantages of a deficiency dividend. What requirements must a PHC and its shareholders meet to use a deficiency dividend to reduce or eliminate the PHC tax liability? Can a deficiency divi...

Q: Determine whether the following statements regarding the PHC tax are true or

Determine whether the following statements regarding the PHC tax are true or false: a. In a given tax year, a corporation might not owe the PHC tax even though it is deemed to be a PHC. b. A sale of...

Q: What are the Sec. 351 reporting requirements?

What are the Sec. 351 reporting requirements?

Q: Explain the implication of the following statement: “Like many dogs

Explain the implication of the following statement: “Like many dogs, the threat (bark) of the PHC tax is much worse than the actual penalties assessed in connection with its (bite).”