Problem 12-11 (Algo) [LO 12-4, 12-6] Mr. Lion, who is in the 37 percent tax bracket, is the sole shareholder of Toto Incorporated, which manufactures greeting cards. Toto's average annual net profit (before deduction of Mr. Lion's salary) is $260,000. For each of the following cases, compute the income tax burden on this profit. (Ignore any payroll tax consequences.) Required: a. Mr. Lion's salary is $100,000, and Toto pays no dividends. b. Mr. Lion's salary is $100,000, and Toto distributes its after-tax income as a dividend. c. Toto is an S corporation. Mr. Lion's salary is $100,000, and Toto makes no cash distributions. Assume Toto's ordinary income qualifies for the 20 percent QBI deduction. d. Toto is an S corporation. Mr. Lion draws no salary, and Toto makes no cash distributions. Assume Toto's ordinary income qualifies for the 20 percent QBI deduction. e. Toto is an S corporation. Mr. Lion draws no salary, and Toto makes cash distributions of all its income to Mr. Lion. Assume Toto's ordinary income qualifies for the 20 percent QBI deduction. a. Income tax burden on this profit b. Income tax burden on this profit c. Income tax burden on this profit d. Income tax burden on this profit $ $ Amount 70,600 95,880

Problem 12-11 (Algo) [LO 12-4, 12-6] Mr. Lion, who is in the 37 percent tax bracket, is the sole shareholder of Toto Incorporated, which manufactures greeting cards. Toto's average annual net profit (before deduction of Mr. Lion's salary) is $260,000. For each of the following cases, compute the income tax burden on this profit. (Ignore any payroll tax consequences.) Required: a. Mr. Lion's salary is $100,000, and Toto pays no dividends. b. Mr. Lion's salary is $100,000, and Toto distributes its after-tax income as a dividend. c. Toto is an S corporation. Mr. Lion's salary is $100,000, and Toto makes no cash distributions. Assume Toto's ordinary income qualifies for the 20 percent QBI deduction. d. Toto is an S corporation. Mr. Lion draws no salary, and Toto makes no cash distributions. Assume Toto's ordinary income qualifies for the 20 percent QBI deduction. e. Toto is an S corporation. Mr. Lion draws no salary, and Toto makes cash distributions of all its income to Mr. Lion. Assume Toto's ordinary income qualifies for the 20 percent QBI deduction. a. Income tax burden on this profit b. Income tax burden on this profit c. Income tax burden on this profit d. Income tax burden on this profit $ $ Amount 70,600 95,880

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Required Information Problem 8-50 (LO 8-1) (Algo) [The following Information applies to the questions displayed below] Lacy is a single taxpayer. In 2023, her taxable income is $52,000. What Is her tax liability in each of the following alternative situations? Use Tax Rate Schedule, Dividends and Capital Gains Tax Rates for reference. Note: Do not round Intermediate calculations. Round your answer to 2 decimal places. Problem 8-50 Part c (Algo) c. Her $52,000 of taxable income includes $9.000 of qualified dividends. Tax liability
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