Provide correct answer this financial account query.. JILL MEIER IS THE SOLE OWNER OF MEIER CORP., WHICH PROVIDESHER ONLY SOURCE OF INCOME. JILL HAS ALWAYS PAID HERSELFENTIRELY BY DRAWING DIVIDENDS FROM HER CORPORATION. AFRIEND SUGGESTED THAT AS LONG AS SHE IS EARNING ABOUTWHAT SHE WOULD HAVE TO PAY SOMEONE ELSE TO RUN THEBUSINESS, SHE MIGHT BE BETTER OFF PAYING HERSELF A SALARYINSTEAD OF DIVIDENDS BECAUSE SHE WOULD AVOID THE PROBLEMOF DOUBLE TAXATION.IF JILL'S COMPANY EARNS $120,000 ALL OF WHICH SHE WILL PAYTO HERSELF, HOW MUCH WILL SHE TAKE HOME UNDER EACHMETHOD? ASSUME A CORPORATE TAX RATE OF 30%, A PERSONALTAX RATE OF 25%, AND A 15% TAX ON DIVIDENDS.

Given InformationCorporate tax rate: 30%Personal income tax rate: 25%Dividend tax rate: 15%Company…

Answered: JILL MEIER IS THE SOLE OWNER OF MEIER…

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter19: Corporations: Distributions Not In Complete Liquidation

Section: Chapter Questions

Problem 48P

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Kristen, the president and sole shareholder of Egret Corporation, has earned a salary bonus of $30,000 for the current year. Because of the lower tax rates on qualifying dividends, Kristen is considering substituting a dividend for the bonus. Assume that the tax rates are 24% for Kristen and 21% for Egret Corporation. Question Content Area a. How much better off would Kristen be if she were paid a dividend rather than salary? If Kristen were paid a bonus, she would receive $fill in the blank bcbd0cf5affa04c_1 22,800 after taxes. If Kristen receives a dividend rather than salary, she would receive $fill in the blank bcbd0cf5affa04c_2 25,500 after taxes. Thus, she would be better off by receiving the dividend . Feedback Area Feedback Closely held corporations have considerable discretion regarding their dividend policies. In the past, the double tax result provided strong motivation to avoid the payment of dividends. Instead, the incentive was to bail out corporate profits in a…
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Subject - account Please help me. Thankyou.
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