Accumulated Earnings Tax Interest Practice Question
Work the complete fact pattern before revealing the explanation. This question is adapted from the IRS public sample set for the current exam law period.
Which statement is correct regarding the accumulated earnings tax on a corporation?
- A
If the tax applies, interest is calculated from the date the return was filed
- B
The tax rate is 25%
- C
Interest is calculated from the date the return was originally due, without extensions
Correct answer - D
An accumulation of $250,000 or less is always within the reasonable needs of a service business
Interest is calculated from the date the return was originally due, without extensions
Interest on the accumulated earnings tax runs from the original return due date, without extensions.
Transfer the reasoning, not the wording.
Restate the tested rule without the answer choices. Then change one decisive fact and explain which option would need to change. That short exercise makes the explanation retrievable instead of merely familiar.
Official sample source
PassFast adapted this public IRS sample for web practice and added the concise explanation above.