QUESTION 1"Consider a C corporation. The corporation earns $4 per share before taxes. After the corporation haspaid its corresponding taxes, it will distribute 50% of its earnings to its shareholders as a dividend. Thecorporate tax rate is 30%, the tax rate on dividend income is 20%, and the personal income tax rate isset at 28%. What are the shareholder's earnings from the corporation after all corresponding taxesare paid? Note: Express your answers in strictly numerical terms. For example, if the answer is 5%,enter 0.05 as an answer; or if the answer is $500, write enter 500 as an answer."

Calculate the corporate tax liability: Corporate tax liability = Earnings per share * Corporate tax…

Answered: QUESTION 1 "Consider a C corporation.…

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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How much after profit would a corporation need to earn to pay down $50,000 of debt, assuming that the corporate tax rate is 25%? Question 14 options: 75,000 62,500 66,667 50,000
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Required Answer each of the following questions by providing supporting computations. 1. Assume that the company’s income tax rate is 30% for all items. Identify the tax effects and after-tax amounts of the three items labeled pretax. 2. Compute the amount of income from continuing operations before income taxes. What is the amount of the income tax expense? What is the amount of income from continuing operations? 3. What is the total amount of after-tax income (loss) associated with the discontinued segment? 4. What is the amount of net income for the year?
Gis a cash basis consultant.His balance sheet at the end of the year shows receivables of $100 and accounts payable for utilities of $30. What is G's basis in the receivables? If G transfers the receivables to a new corporation in exchange for 100% of the stock and the corporation assumes the liabilities is G taxed on the transfer?
Which of these involves the income-shifting strategy? Multiple Choice O O A corporation paying its shareholders a $20,000 dividend. A corporation paying its owner a $20,000 salary. A high tax rate taxpayer investing in tax-exempt municipal bonds. A cash-basis business delaying billing its customers until after year-end. None of the choices are correct.
Assume the following year 2 income statement for Johnstone Corporation, which was a C corporation in year 1 and elected to be taxed as an S corporation beginning in year 2. Johnstone's earnings and profits at the end of year 1 were $11,560. Marcus is Johnstone's sole shareholder, and he has a stock basis of $46,000 at the end of year 1. Johnstone Corporation Income Statement December 31, Year 2 Year 2 (S Corporation) $ 174,000 ( 41,000) (66,000) (56,500) (10,000) ( 4,600) 12,540 $ 8,440 Sales revenue Cost of goods sold Salary to owners Employee wages Depreciation expense Miscellaneous expenses Interest income Overall net income What is Johnstone's accumulated adjustments account at the end of year 2, and what amount of dividend income does Marcus recognize on the year 2 distribution in each of the following alternative scenarios? (Leave no answer blank. Enter zero if applicable.) b. Johnstone distributed $11,200 to Marcus in year 2. Accumulated adjustments account Dividend income
8. A closely-held corporation, deemed committed unreasonably accumulating its income, shows the following data: Paid-up capital Accumulated Earnings - unrestricted Accumulated Earnings - restricted Income tax per annual income tax return Income tax for the first three quarters Final tax on passive income at 20% Capital gains tax at 15% Compute the amount of improperly accumulated earnings tax (IAET). P 10,000,000 8,000,000 2,000,000 300,000 240,000 60,000 45,000 8
8. What is the after-tax return to a corporation that buys a share of preferred stock at $45, sells it at year-end at $45, and receives a $5 year-end dividend? The firm is in the 20% tax bracket. Revenue = $5 For a company, taxable = $5 * 30% = $1.5 Tax = $1.5* 20% = $0.3 After tax income = $5 - $0.3= $4.7 Return $4.7/$45= 10.44%
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22. A domestic corporation has a net income of P1,200,000 in the Philippines and P800,000 from abroad. Compute the income tax due
1 Calculate the Tax implications if the company has earnings before taxes of $ 350,000.00 Both if the company is a Corporation or Sole proprietorship What is the total taxes, average rate and the marginal tax rate Corporate Tax Rate: Total Taxes as Coorporation Personal Marginal Income Tax Rates: Single: Taxable Income Over--- 0 9,525 38,700 82,500 157,500 200,000 500,000 Total Tax Paid Marginal Tax Rate Average Tax Rate Taxable Income 350000 But not over Over--- 0 9,525 38,700 82,500 157,500 200,000 500,000 === 9,525 38,700 82,500 157,500 200,000 500,000 But not over --- 9,525 38,700 82,500 157,500 200,000 500,000 Marginal Tax Rate 10% 12% 22% 24% 32% 35% 37% Marginal Tax Rate 10% 12% 22% 24% 32% 35% 37% 21% Difference Incremental Taxes Cumulative Taxes
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