Regarding the Accumulated Earnings Tax (AET), what is the minimum accumulated earnings credit allowed for a manufacturing C Corporation?

Answer options:

$150,000

$250,000

$1,000,000

How to approach this question

AET Credit: $250,000 generally. $150,000 for Personal Service Corps (Health, Law, Accounting, Engineering, Architecture).

Full Answer

C.$250,000✓ Correct

The accumulated earnings credit allows a corporation to accumulate up to $250,000 of earnings without being subject to the AET. For personal service corporations (health, law, accounting, etc.), the credit is limited to $150,000.

Common mistakes

Confusing the general limit ($250k) with the PSC limit ($150k).

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