“Avoid the Hidden Dangers of the
Accumulated Earnings Penalty Tax”
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with all the details…
Remember how the movie Jaws starts?
A young girl is swimming in the open water when a giant shark comes up out of the depths and attacks her. Shocking!
Okay, it’s a bit of a reach, but the same plot is at work when it comes to the Accumulated Earnings Penalty tax (AEP).
There you are, happily running your C corporation when the IRS comes out of the depths and nails you.
What is the AET?
The IRS can impose a 20% accumulated earnings tax on C corporations that retain too much earnings to avoid issuing taxable dividends to shareholders.
Corporations can avoid this penalty tax by:
Retaining no more than the accumulated
earnings tax credit
Electing S corporation status
Retaining no more funds than is necessary for reasonable business needs. Proper documentation is key to avoiding the tax
Because this subject is so important, I refer you to my new article.
CLICK HERE to read my completely new article titled:
“Avoid the Hidden Dangers of the
Accumulated Earnings Penalty Tax”