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.
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Chapter 12 Solutions
Loose Leaf for Principles of Taxation for Business and Investment Planning 2019 Edition
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