1)During the year, CDE Corporation earned enough profits to pay dividends to its shareholders. CDE is a C corporation. What are the tax consequences of this distribution? The corporation will increase their earnings and profits by the amount distributed. The corporation will reduce its taxable income by the amount distributed to the shareholders. The corporation will pay a flat tax of 21% on the amount distributed. The shareholders also include their dividends received in taxable income. There are no direct tax consequences for either the corporation or the shareholders.
1)During the year, CDE Corporation earned enough profits to pay dividends to its shareholders. CDE is a C corporation. What are the tax consequences of this distribution? The corporation will increase their earnings and profits by the amount distributed. The corporation will reduce its taxable income by the amount distributed to the shareholders. The corporation will pay a flat tax of 21% on the amount distributed. The shareholders also include their dividends received in taxable income. There are no direct tax consequences for either the corporation or the shareholders.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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1)During the year, CDE Corporation earned enough profits to pay dividends to its shareholders. CDE is a C corporation. What are the tax consequences of this distribution?
The corporation will increase their earnings and profits by the amount distributed.
The corporation will reduce its taxable income by the amount distributed to the shareholders.
The corporation will pay a flat tax of 21% on the amount distributed. The shareholders also include their dividends received in taxable income.
There are no direct tax consequences for either the corporation or the shareholders.
20 Choose the response that correctly describes a guaranteed payment.
A loan payment from the partnership to pay back a loan from a partner.
A loan payment from the partner to pay back a loan from a partnership.
A payment made to a partner from the profits of the partnership.
A payment made to a partner without regard to the income of the partnership.
3)Which of the following expenses may a partnership elect to amortize?
Advertising expense from before the partnership began their first actual day of business.
Employment taxes paid by the partnership.
Professional fees paid after the partnership began business.
The purchase of a building and land.
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Follow-up Question
Which of the following expenses may a partnership elect to amortize?
Advertising expense from before the partnership began their first actual day of business.
Employment taxes paid by the partnership.
Professional fees paid after the partnership began business.
The purchase of a building and land.
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