JILL MEIER IS THE SOLE OWNER OF MEIER CORP., WHICH PROVIDES HER ONLY SOURCE OF INCOME. JILL HAS ALWAYS PAID HERSELF ENTIRELY BY DRAWING DIVIDENDS FROM HER CORPORATION. A FRIEND SUGGESTED THAT AS LONG AS SHE IS EARNING ABOUT WHAT SHE WOULD HAVE TO PAY SOMEONE ELSE TO RUN THE BUSINESS, SHE MIGHT BE BETTER OFF PAYING HERSELF A SALARY INSTEAD OF DIVIDENDS BECAUSE SHE WOULD AVOID THE PROBLEM OF DOUBLE TAXATION. IF JILL'S COMPANY EARNS $120,000 ALL OF WHICH SHE WILL PAY TO HERSELF, HOW MUCH WILL SHE TAKE HOME UNDER EACH METHOD? ASSUME A CORPORATE TAX RATE OF 30%, A PERSONAL TAX RATE OF 25%, AND A 15% TAX ON DIVIDENDS.
JILL MEIER IS THE SOLE OWNER OF MEIER CORP., WHICH PROVIDES HER ONLY SOURCE OF INCOME. JILL HAS ALWAYS PAID HERSELF ENTIRELY BY DRAWING DIVIDENDS FROM HER CORPORATION. A FRIEND SUGGESTED THAT AS LONG AS SHE IS EARNING ABOUT WHAT SHE WOULD HAVE TO PAY SOMEONE ELSE TO RUN THE BUSINESS, SHE MIGHT BE BETTER OFF PAYING HERSELF A SALARY INSTEAD OF DIVIDENDS BECAUSE SHE WOULD AVOID THE PROBLEM OF DOUBLE TAXATION. IF JILL'S COMPANY EARNS $120,000 ALL OF WHICH SHE WILL PAY TO HERSELF, HOW MUCH WILL SHE TAKE HOME UNDER EACH METHOD? ASSUME A CORPORATE TAX RATE OF 30%, A PERSONAL TAX RATE OF 25%, AND A 15% TAX ON DIVIDENDS.
Chapter19: Corporations: Distributions Not In Complete Liquidation
Section: Chapter Questions
Problem 48P
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Question
Provide correct answer this financial account query..
Transcribed Image Text:JILL MEIER IS THE SOLE OWNER OF MEIER CORP., WHICH PROVIDES
HER ONLY SOURCE OF INCOME. JILL HAS ALWAYS PAID HERSELF
ENTIRELY BY DRAWING DIVIDENDS FROM HER CORPORATION. A
FRIEND SUGGESTED THAT AS LONG AS SHE IS EARNING ABOUT
WHAT SHE WOULD HAVE TO PAY SOMEONE ELSE TO RUN THE
BUSINESS, SHE MIGHT BE BETTER OFF PAYING HERSELF A SALARY
INSTEAD OF DIVIDENDS BECAUSE SHE WOULD AVOID THE PROBLEM
OF DOUBLE TAXATION.
IF JILL'S COMPANY EARNS $120,000 ALL OF WHICH SHE WILL PAY
TO HERSELF, HOW MUCH WILL SHE TAKE HOME UNDER EACH
METHOD? ASSUME A CORPORATE TAX RATE OF 30%, A PERSONAL
TAX RATE OF 25%, AND A 15% TAX ON DIVIDENDS.
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