Jabar Corporation, a C corporation, projects that it will have taxable income of $260,000 before incurring any lease expenses. Jabar's tax rate is 35 percent. Abdul, Jabar's sole shareholder, has a marginal tax rate of 39.6 percent on ordinary income and 20 percent on dividend income. Jabar always distributes all of its after-tax earnings to Abdul. What is the amount of the overall tax (corporate level + shareholder level) on Jabar Corp.'s $260,000 prelease expense income if Jabar Corp. distributes all of its after-tax earnings to its sole shareholder, Abdul (include the 3.8% net investment income tax on dividend and rental income.)? (Input all answers as a positive number and round your answers to the nearest whole dollar.)(general account)(03)

CONCEPTS IN FED.TAX.,2020-W/ACCESS
20th Edition
ISBN:9780357110362
Author:Murphy
Publisher:Murphy
Chapter2: Income Tax Concepts
Section: Chapter Questions
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Jabar Corporation, a C corporation, projects that it
will have taxable income of $260,000 before
incurring any lease expenses. Jabar's tax rate is 35
percent. Abdul, Jabar's sole shareholder, has a
marginal tax rate of 39.6 percent on ordinary income
and 20 percent on dividend income. Jabar always
distributes all of its after-tax earnings to Abdul.
What is the amount of the overall tax (corporate
level + shareholder level) on Jabar Corp.'s $260,000
prelease expense income if Jabar Corp. distributes
all of its after-tax earnings to its sole shareholder,
Abdul (include the 3.8% net investment income tax
on dividend and rental income.)? (Input all answers
as a positive number and round your answers to the
nearest whole dollar.)(general account)(03)
Transcribed Image Text:Jabar Corporation, a C corporation, projects that it will have taxable income of $260,000 before incurring any lease expenses. Jabar's tax rate is 35 percent. Abdul, Jabar's sole shareholder, has a marginal tax rate of 39.6 percent on ordinary income and 20 percent on dividend income. Jabar always distributes all of its after-tax earnings to Abdul. What is the amount of the overall tax (corporate level + shareholder level) on Jabar Corp.'s $260,000 prelease expense income if Jabar Corp. distributes all of its after-tax earnings to its sole shareholder, Abdul (include the 3.8% net investment income tax on dividend and rental income.)? (Input all answers as a positive number and round your answers to the nearest whole dollar.)(general account)(03)
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