Kappa Corporation has the following items of income and expense:

• Taxable income: $310,000
• Federal income tax paid: $80,000
• Dividends paid: $20,000
• Accumulated earnings and profits at the end of the preceding year: $90,000

Kappa is an engineering firm with 100% of the stock owned by its three employee-shareholders. The corporation cannot establish a valid business purpose for excess accumulations. How much accumulated earnings tax is payable by Kappa?

A)

$42,000

B)

$34,000

C)

$46,000

D)

$30,000