a.
Compute the annual after-tax
b.
Compute the annual after-tax cash flow available for reinvestment in the business, if Person A operates the business as regular (C) corporation and it makes no dividend distributions.
c.
Explain the tax consequences to Person A and the business of the withdrawal in case if the business is operated as a sole proprietorship. Identify whether the after-tax cash flow would remain for reinvestment in the business and determine the amount of after-tax cash flow, would Person A have from the withdrawal.
d.
Explain the tax consequences to Person A and the business of a $20,000 withdrawal in the form of a dividend in case it is operated as a C Corporation. Identify the amount of after-tax cash flow would remain for reinvestment in the business. Determine the amount of after-tax cash flow will be retained from the dividend by Person A.
e.
Comment on the given situation for getting the better result.
Want to see the full answer?
Check out a sample textbook solution
Chapter 12 Solutions
Loose Leaf for Principles of Taxation for Business and Investment Planning 2019 Edition
- Solve this general accounting problemarrow_forwardChapter 6: Job costing Steel Manufacturing uses a job order costing system. During one month, Steel purchased $188,000 of raw materials on credit; issued materials to the production of $215,000 of which $10,000 were indirect. Steel incurred a factory payroll of $159,000, of which $20,000 was indirect labor. Steel uses a predetermined overhead rate of 150% of direct labor cost. The total manufacturing costs added during the period are___.arrow_forwardWhat is the accounts receivable turnover of this financial accounting question?arrow_forward
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education