In the current year, Kennedy Corporation is deemed to be a PHC and reports the following results:
Taxable income ………………………………………………………… $400,000
Federal income taxes …………………………………………………… 136,000
Dividends paid to Marlene, Kennedy’s sole shareholder……………….. 75,000
The following information is available:
• The corporation received $100,000 of dividends from a 25%-owned domestic corporation.
• The corporation received $30,000 of tax-exempt interest income.
• The corporation recognized a $175,000 Sec. 1231 gain on the sale of land.
a. What is Kennedy’s PHC tax liability?
b. What measures can Kennedy take to eliminate the PHC tax liability after year-end and before Kennedy files its tax return? After Kennedy files its tax return?