ExpertEasy1 markMultiple Choice
CPA · Question 54 · Area 3: Entity Tax Compliance
A C Corporation is a Personal Holding Company (PHC). It has undistributed PHC income of $50,000. What is the PHC tax rate applied to this income?
A C Corporation is a Personal Holding Company (PHC). It has undistributed PHC income of $50,000. What is the PHC tax rate applied to this income?
Answer options:
A.
21%
B.
20%
C.
37%
D.
15%
How to approach this question
1. Identify PHC Tax: Penalty tax on undistributed passive income.<br/>2. Rate: 20% (current rate).<br/>3. Result: 20%.
Full Answer
B.20%✓ Correct
The Personal Holding Company tax is 20% of the undistributed personal holding company income.
Common mistakes
Using the corporate tax rate (21%).
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