Passive Investment Income Penalty Tax
Passive Investment Income Penalty Tax means:
a tax imposed on the excess passive activity income of an S corporation that has accumulated earnings and profits.
from Subchapter C years. The highest corporate rate is applied to the S corporation's excess net passive income, as follows:
Passive investment income in excess of 25% of gross receipts for the year x income for Passive investment income for the year.
The tax is paid by the S corporation. The amount subject to the tax may not exceed the taxable income of the S corporation. Former IRC (check if this IRC provision is current here) §1375.
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