Q. Please write the following:

A. The 15% rate for the two penalty taxes on accumulated corporate earnings equals the 15% preferential rate that would apply if the earnings were distributed as taxable dividends to individual shareholders. Thus, the penalty taxes replicate the shareholder level tax and negate any tax advantage of accumulating corporate income to avoid such tax.

Do you think this will be repealed by the new tax law?

B. Is any S-Corp income subject to self-employment tax? Why or why not?