In the current year, Azure Company has $350,000 of net operating income before deducting any compensation or other payment to its sole owner, Sasha. In addition, Azure has interest on municipal bonds of $25,000. Sasha has signifi- cant income from other sources and is in the 37% marginal tax bracket. Based on this information, determine the income tax consequences to Azure Company and to Sasha during the year for each of the following independent situations. (Ignore the deduction for qualified business income and the 3.8% Medicare surtax on net investment income.) **Part 4 and 5 answered through bartleby Azure is a C corporation and pays no dividends or salary to Sasha. Azure is a C corporation and distributes $75,000 of dividends to Sasha. Azure is a C corporation and pays $75,000 of salary to Sasha.
In the current year, Azure Company has $350,000 of net operating income before deducting any compensation or other payment to its sole owner, Sasha. In addition, Azure has interest on municipal bonds of $25,000. Sasha has signifi- cant income from other sources and is in the 37% marginal tax bracket. Based on this information, determine the income tax consequences to Azure Company and to Sasha during the year for each of the following independent situations. (Ignore the deduction for qualified business income and the 3.8% Medicare surtax on net investment income.) **Part 4 and 5 answered through bartleby
-
Azure is a C corporation and pays no dividends or salary to Sasha.
-
Azure is a C corporation and distributes $75,000 of dividends to Sasha.
-
Azure is a C corporation and pays $75,000 of salary to Sasha.
C Corporation:
It is a type of corporation which different from an S corporation that has limited liability. It is taxed separately from its owner at a 21% rate applicable from the year 2018.
Dividend:
A dividend is an amount received by shareholders on their invested amount in the stock of the company. The dividend received by an individual is taxable. It taxed at a professional rate of 0%, 15%, and 20%.
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 2 images
