Special Taxes

Accumulated Earnings Tax (AET)
 

  • Designed to encourage corporations to pay dividends
  • Corporations can accumulate $250,000 without establishing a business need
  • Tax is in addition to normal corporate tax
  • If the corporation retains earnings and profits to avoid income tax to its shareholders and increase share price, it is subject to an annual AET penalty equal to 15% of its accumulated taxable income for the year

Dividend Received Deduction
 

  • "Corporate shareholders" are allowed an income exclusion for dividends received from another corporation
  • 100% exclusion if ownership in the dividend paying firm is 80% or greater
  • 80% exclusion if ownership in the dividend paying firm is between 20 to 80%
  • 70% exclusion if ownership in the dividend paying is 20% or less

Corporate Tax Rates
 

 

If Taxable Income Is The Tax Is:
Not over $50,000 15% of the taxable income
Over $50,000 but not over $75,000 $7,500 plus 25% of the amount over $50,000
Over $75,000 but not over $100,000 $13,750 plus 34% of the amount over $75,000
Over $100,000 but not over $335,000 $22,250 plus 39% of the amount over $100,000
Over $335,000 but not over $10,000,000 $113,900 plus 34% of the amount over $335,000
Over $10,000,000 but not over $15,000,000 $3,400,000 plus 35% of the amount over $10,000,000
Over $15,000,000 but not over $18,333,333 $5,150,000 plus 38% of the amount over $15,000,000
Over 18,333,333   35% of the taxable income  
Qualified personal service corporations are taxed at a flat rate of 35% of taxable income

 



Distributions

Related Articles
  1. Personal Finance

    Explaining Double Taxation

    Double taxation refers to income taxes being imposed twice on the same source of earned income.
  2. Retirement

    Understanding How Dividends Are Taxed

    Learn how dividends are taxed by the IRS, and understand the different types of dividend income as well as the capital gains tax rates.
  3. Personal Finance

    Explaining Corporate Tax

    A corporate tax is a tax levied on the profits a corporation generates.
  4. Financial Advisor

    How to Plan for Taxes on Dividends

    Dividends are taxed differently than other investment income. Here are some strategies to help lower taxes on dividends.
  5. Markets

    3 Tax Implications of Dividend Stocks

    Dividend paying companies are attractive in a low interest rate environment, but income seeking investors have to be careful of the potential tax hit.
  6. Personal Finance

    How Are Capital Gains And Dividends Taxed Differently?

    Individuals in the 25% or higher tax bracket pay a 20% tax on long-term capital gains.
  7. Personal Finance

    Explaining Taxable Income

    Taxable income is the net of gross income and allowable deductions.
  8. Personal Finance

    Explaining Progressive Tax

    A progressive tax is a levy in a tax system where the tax rate increases as the taxable base increases.
  9. Personal Finance

    Comparing Long-Term vs. Short-Term Capital Gain Tax Rates

    Learn about the difference between short- and long-term capital gains and how the duration of your investment can impact your tax liability.
  10. Personal Finance

    Taxes in California for Small Business: The Basics

    Understand the tax implications of running a small business in California, and learn which state taxes apply based on business type.
Trading Center