howard corporation conducts a manufacturing business and has a compelling need to ac 4519683

Howard Corporation conducts a manufacturing business and has a compelling need to accumulate earnings. Its January 1, E&P balance is $600,000. It reports the following operating results for the current year: Taxable income ………………………………………….. $700,000 Federal income taxes …………………………………….. 238,000 Dividends paid:?July 15 of the current year ……………. 50,000 February 10 of the following year ………………………… 100,000 Other information relating to Howard’s current year operations is as follows: NOL carryover from last year deducted in the current year ……………… $100,000 Net capital gain ……………………………………………………………. 100,000 Dividends received from 10%-owned domestic corporation …………….. 75,000 Current year E&P before dividend payments is $400,000. Howard can justify the retention of $120,000 of current E&P to meet the reasonable needs of its business. a. What is Howard’s accumulated taxable income? b. What is Howard’s accumulated earnings tax liability?

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