Daisy, Inc

Essay

Daisy, Inc., has taxable income of $850,000 during 2014, its first year of operations. Daisy distributes dividends of $200,000 to its 10 shareholders (i.e., $20,000 each). Daisy earmarks $361,000 of its earnings for potential future expansion into other cities.
a. Calculate Daisy's total tax liability associated with the current tax year if the $361,000 is treated as representing reasonable needs of the business.
b. Calculate Daisy's total potential tax liability associated with the current tax year if none of the $361,000 qualifies as reasonable needs of the business.