AWMA Test Review 1 Questions and Answers 100% Solved

AWMA Test Review 1 Questions and Answers 100% Solved If ABC Corporation has net profits of $100,000 and distributes $50,000 as dividends, what is its taxable income? A. $0 B. $25,000 C. $50,000 D. $100,000 ️️The net profits of a corporation are subject to federal income taxation. This tax is levied on corporate taxable income before payment of dividends to common and preferred shareholders. Thus, if ABC Corporation has net profits of $100,000 and distributes $50,000 as dividends, its taxable income is still $100,000. Distribution of profits as dividends does not reduce taxable income for a corporation Qualified Plans ️️Meet the stringent requirements of the IRC as well as those of the ERISA and therefore qualify for favorable tax treatment. In pension and profit sharing plans an employee is generally not taxed on employer contributions or accumulated earnings until the funds are actually received from the plan. The employer receives a deduction at the time of contribution. for qualified stock option plans the employee is not taxed until it is sol