PERSONAL HOLDING COMPANY TAX/PENALTY(10 Points)

Beola Corporation, your new client, is facing a possible Personal Holding Company Tax (Section 541) or Accumulated Earnings Tax (Section 531) for the current tax year. Beola Corporation has provided you the following information for the current tax year:

Taxable Income

$496,000

Dividends Received Deduction

92,000

Accumulated Earnings Credit

95,600

Dividends Paid

138,000

Federal Income Taxes

104,160

Excess Charitable Contributions

54,800