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Practice CPA®CPA TCP Practice ExamQuestion 54

Easy1 markMultiple Choice

Area 3: Entity Tax ComplianceTCPEntity TaxC Corporation

CPA · Question 54 · Area 3: Entity Tax Compliance

A C Corporation is a Personal Holding Company (PHC). It has undistributed PHC income of $50,000. What is the PHC tax rate applied to this income?

Answer options:

A.

21%

B.

20%

C.

37%

D.

15%

How to approach this question

1. Identify PHC Tax: Penalty tax on undistributed passive income.<br/>2. Rate: 20% (current rate).<br/>3. Result: 20%.

Full Answer

B.20%✓ Correct

B

The Personal Holding Company tax is 20% of the undistributed personal holding company income.

Common mistakes

Using the corporate tax rate (21%).

Question 53 All questions Question 55

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