ExpertHard1 markMultiple Choice
CPA · Question 63 · Area V: Entity Taxation
Regarding the Accumulated Earnings Tax (AET), what is the minimum accumulated earnings credit allowed for a manufacturing C Corporation?
Regarding the Accumulated Earnings Tax (AET), what is the minimum accumulated earnings credit allowed for a manufacturing C Corporation?
Answer options:
A.
$150,000
B.
$0
C.
$250,000
D.
$1,000,000
How to approach this question
AET Credit: $250,000 generally. $150,000 for Personal Service Corps (Health, Law, Accounting, Engineering, Architecture).
Full Answer
C.$250,000✓ Correct
The accumulated earnings credit allows a corporation to accumulate up to $250,000 of earnings without being subject to the AET. For personal service corporations (health, law, accounting, etc.), the credit is limited to $150,000.
Common mistakes
Confusing the general limit ($250k) with the PSC limit ($150k).
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