The personal holding company tax and the accumulated earnings tax reflect efforts to prevent use of the corporate entity to avoid taxation. Explain the congressional intent behind these two tax measures. *** Explain the congressional intent behind the personal holding company tax O A. Congress enacted this tax to ensure income in a corporation is taxed appropriately. The corporation will pay an additional tax if they try to distribute the income in the form of a dividend of earnings, which could be deducted to arrive to taxable income OB. Congress enacted this tax as a way to force S corporations and tax-exempt organizations to not abuse their corporate status. The measure taken is an additional tax imposed for every dollar kept in the corporation for investment purposes O c. Congress enacted this tax to prevent corporations from sheltering passive, investment, or personal income within a corporate entity and have such earnings taxed at lower corporate tax rates. The measure taken is in the form of a penalty tax imposed on a closely held corporation that earns these incomes when the corporation fails to distribute sufficient after-tax earnings to its shareholders in the form of a dividend. D. Congress enacted this tax to prevent a corporation from retaining earnings to avoid the shareholder level income tax on distributed earnings. The measure takes the form of a penalty tax imposed on a corporation that retains earnings exceeding the reasonable needs of the business.

The personal holding company tax and the accumulated earnings tax reflect efforts to prevent use of the corporate entity to avoid taxation. Explain the congressional intent behind these two tax measures. Explain the congressional intent behind the personal holding company tax. OA. Congress enacted this tax to ensure income in a corporation is taxed appropriately. The corporation will pay an additional tax if they try to distribute the income in the form of a dividend of earnings, which could be deducted to arrive to taxable income OB. Congress enacted this tax as a way to force S corporations and tax-exempt organizations to not abuse their corporate status. The measure taken is an additional tax imposed for every dollar kept in the corporation for investment purposes OC. Congress enacted this tax to prevent corporations from sheltering passive, investment, or personal income within a corporate entity and have such earnings taxed at lower corporate tax rates. The measure taken is in the form of a penalty tax imposed on a closely held corporation that earns these incomes when the corporation fails to distribute sufficient after-tax earnings to its shareholders in the form of a dividend. OD. Congress enacted this tax to prevent a corporation from retaining earnings to avoid the shareholder level income tax on distributed earnings. The measure takes the form of a penalty tax imposed on a corporation that retains earnings exceeding the reasonable needs of the business