Can you please solve this accounting issue? You are a shareholder in a "C" corporation. This corporation earns$4 per share before taxes. After it has paid taxes, it will distributethe remainder of its earnings to you as a dividend. The dividendis income to you, so you will then pay taxes on these earnings.The corporate tax rate is 35% and your tax rate on dividend incomeis 15%. The effective tax rate on your share of the corporation'searnings is closest to:a. 15%b. 35%c. 45%

Step 1: Define Effective Tax RateThe rate that considers both the personal and corporate tax on a…

Answered: You are a shareholder in a "C"…

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter2: Financial Statements, Cash Flow,and Taxes

Section: Chapter Questions

Problem 10MC

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You are a shareholder in a "S" corporation. This corporation earns $4 per share before taxes. After it has paid taxes, it will distribute the remainder of its earnings to you as a dividend. The dividend is income to you, so you will then pay taxes on these earnings. The corporate tax rate is 21% and your tax rate on dividend income is 15%. The effective tax rate on your share of the corporations' earnings is closest to: WHEELSTE • 15% O 21% О 28% O 33% • 36%
You are a shareholder in a C corporation. The corporation earns $2.01 per share before taxes. Once it has paid taxes it will distribute the rest of its earnings to you as a dividend. Assume the corporate tax rate is 22% and the personal tax rate on (both dividend and non-dividend) income is 20%. How much is left for you after all taxes are paid?
You are a shareholder in a C corporation. The corporation earns $2.13 per share before taxes. Once it has paid taxes, it will distribute the rest of its earnings to you as a dividend. The corporate tax rate is 25%, and your personal tax rate on (both dividend and non-dividend) income is 20%. How much is left for you after all taxes are paid?
You are a shareholder in a C corporation. The corporation earns $1.77 per share before taxes. Once it has paid taxes, it will distribute the rest of its earnings to you as a dividend. The corporate tax rate is 21% and your personal tax rate on (both dividend and non-dividend) income is 20%. How much is left for you after all taxes are paid? The amount that remains is how much per share? (Round to the nearest cent.)
You are a shareholder in a corporation. The corporation earns $8.00 per share before taxes. After it has paid taxes, it will distribute the rest of it's earnings to you as a dividend (We make this simplifying assumption, but should note that most corporations retain some of their earnings for reinvestment). The dividend is income to you, so you will then pay taxes on these earnings. The corporate tax rate is 25% and your tax rate on dividend income is 20%. How much of the earnings remains after all taxes are paid?
You are a shareholder in an S corporation. The corporation earns $1.67 per share before taxes. As a pass through entity, you will receive $1.67 for each share that you own. Your marginal tax rate is 20%. How much per share is left for you after all taxes are paid? Amount that remains is $ per share. (Round to the nearest cent.)
You own 100 shares of a "C" Corporation. The corporation earns $5.00 per share before taxes. Once the corporation has paid any corporate taxes that are due, it will distribute the rest of its earnings to its shareholders in the form of a dividend. If the corporate tax rate is 40% and your personal tax rate on (both dividend and non-dividend) income is 30%, then how much money is left for you after all taxes have been paid? A) $210 B) $300 C) $350 D) $500
From a corporation's point of view, does the tax treatment of dividends and interest paid favor the use of debt financing or equity financing? O Debt financing Equity financing You bought 1,000 shares of Tund Corp. stock for $60.59 per share and sold it for $82.35 per share after a few years. How will your gain or loss be treated when you file your taxes? will O As a capital gain taxed at the long-term tax rate O As a capital gain taxed at the current ordinary-income tax rate Depreciation expenses directly affect a company's taxable income. An increase in depreciation expense will lead to a tax deducted from a company's earnings, thus leading to a operating cash flow. According to a tax law established in 1969, taxpayers must pay the The applicable tax rate for S corporations is based on the: Stockholders' individual tax rates O Corporate tax rate taxable income. It of the Alternative Minimum Tax (AMT) or regular tax.
During the year, CDE Corporation earned enough profits to pay dividends to its shareholders. CDE is a C corporation. What are the tax consequences of this distribution? (a) The corporation will increase their earnings and profits by the amount distributed. (b) The corporation will reduce its taxable income by the amount distributed to the shareholders. (c) The corporation will pay a flat tax of 21% on the amount distributed. The shareholders also include their dividends received in taxable income. (d) There are no direct tax consequences for either the corporation or the shareholders.
Gopher Corporation began the year with a large amount of accumulated earnings and profits and ended the year reporting taxable income of $100,000. Gopher wants to distribute its after-tax earnings to its sole shareholder, Sven Anderson. The dividend would meet the requirements to be a qualified dividend, and Sven is subject to a tax rate of 15 percent on dividend income. What is the amount of the dividend distribution and how much income does Sven realize after taxes? Answer is not complete. Corporate income Corporate tax Dividend distribution to Seven Shareholder tax Total after tax income $100,000 $105,000 x $ 15,000
You bought 1,000 shares of Tund Corp. stock for $90.03 per share and sold it for $60.59 per share within the same year. How will your gain or loss be treated when you file your taxes? O As a capital loss deducted from current taxable income O As a capital gain taxed at the current ordinary-income tax rate OAs a capital loss taxed at the long-term tax rate O As a capital loss deducted from taxable income in the year that the loss is realized
You bought 1,000 shares of Tund Corp. stock for $68.12 per share and sold it for $90.03 per share after a few years. How will your gain or loss be treated when you file your taxes? O As a capital gain taxed at the long-term tax rate O As a capital gain taxed at the current ordinary-income tax rate As a capital loss deducted from taxable income in the year that the loss is realized As a capital loss taxed at the long-term tax rate Suppose you want to invest $10,000. You have two options: (1) Invest in California municipal bonds with an expected rate of return of 9.00%, or (2) invest in J and K Corp.'s bonds with an expected rate of return of 12.15%. Assume that your decision is based on a tax perspective. If everything else is the same for both bonds, at what tax rate would you be indifferent between these two bonds? 25.93% 23.34% 22.04% O 32.41% According to a tax law established in 1969, taxpayers must pay the The applicable tax rate for S corporations is based on the: Stockholders'…

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