Saturn Cleaning, Inc. provides cleaning services in Atlanta, Georgia. It is not a member of a controlled or an affiliated group. Saturn reports the following results for the current year:
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Included in taxable income are the following items that may require special treatment:
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Saturn's accumulated earnings and profits (E&P) balance and its reasonable business needs on January 1 of the current year, were $155,000. The firm can justify the retention of $150,000 of current E&P to meet its reasonable business needs.
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Results
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Taxable income $ 520,000
Federal income taxes 109,200
Dividends paid in August of the current year 100,000
Requirements a. and b. What is Saturn's accumulated taxable income and accumulated earnings tax liability?
Complete the table below to determine Saturn's accumulated taxable income and accumulated earnings tax liability. (Enter tax rate in de
Taxable income 520000
Plus:
Dividend-received deduction 78000
Excess charitable contributions carried over from a preceding tax year and deducted in the current year 30000
Minus:
Items
Accrued U.S. and foreign income taxes (109200)
Dividends-paid deduction (100000)
Net capital gain minus the amount of any associated income taxes (23700)
Accumulated earnings credit
Accumulated taxable income
Times: Tax rate (in decimal form) .20
Accumulated earnings tax liability
Long-term capital gains $ 30,000
Short-term capital gains 9,000
Dividends from 22%-owned domestic corporation 120,000
Excess charitable contributions from last year that are deductible in the current year 30,000
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