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During a recent IRS audit, the revenue agent decided that the Parker family used their closely held corporation, Falco, to avoid shareholder tax by accumulating
During a recent IRS audit, the revenue agent decided that the Parker family used their closely held corporation, Falco, to avoid shareholder tax by accumulating earnings beyond the reasonable needs of the business. Falcos taxable income was $ it paid no dividends, and it had no business need to retain income. Falco's marginal tax rate in prior years was percent. Assume the accumulated earnings tax rate is for all applicable years in this problem.Required:
During a recent IRS audit, the revenue agent decided that the
Parker family used their closely held corporation, Falco, to avoid
shareholder tax by accumulating earnings beyond the reasonable
needs of the business. Falcos taxable income was $ it
paid no dividends, and it had no business need to retain income.
Falco's marginal tax rate in prior years was percent. Assume the
accumulated earnings tax rate is for all applicable years in
this problem.Required:
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