2016 CCH Federal TaxationComprehensive Topics

Comprehensive Problem. Marital Aids Inc. reported the following results last year:

Gross income from sales	$50,000
Salaries	20,000
Overhead	25,000
Capital gains	200,000
Net operating loss from previous year	30,000
Dividends from U.S. sources	40,000
Tax-exempt interest	10,000
Taxable interest	35,000
Income tax paid (including $59,650 on capital gains)	62,050

If the corporation has only four individual shareholders, compute the following:

1. Adjusted ordinary gross income.
2. Personal holding company income.
3. Undistributed personal holding company income.
4. Current dividend required to avoid personal holding company tax.
5. What impact would it have if taxable interest was only $12,000 and there was no NOL carryover?

(Smith)

Smith, Ephraim, Philip Harmelink, James Hasselback. CCH Federal Taxation: Comprehensive Topics, 127th Edition. CCH Inc., 04/2015. VitalBook file.

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