The loophole tax service inc. has accumulated earnings of $135,000 and current earnings of $60,000. if the dividends-paid deduction is $8,500 and reasonable business needs amount to $160,000, what is the accumulated earnings credit

it will be credit by 51,500

Explanation:

This will be calcualte with the same procedure as retained earnings:

beginning + income - dividends = ending

We should understand that this is done to determinate if a company is subject to the accumualted earnings tax.

accumualed earnings 135,000

income for the period  60,000

dividends                       (8,500)

increase:                         51,500

net                               186,500

This amount is less than the 250,000 exempt so there is not amount subject to accumulated earnings tax.

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