McGraw-Hill's Taxation of Individuals 2020 Edition
11th Edition
ISBN: 9781260432596
Author: SPILKER, Brian
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Textbook Question
Chapter 15, Problem 57P
Dave and his friend Stewart each own 50 percent of KBS. During the year, Dave receives $75,000 compensation for services he performs for KBS during the year. He performed a significant amount of work for the entity and he was heavily involved in management decisions for the entity (he was not a passive investor in KBS). After deducting Dave’s compensation, KBS reports taxable income of $30,000. How much FICA and/or self-employment tax is Dave required to pay on his compensation and his share of the KBS income if KBS is formed as a C corporation, an S corporation, or a limited liability company (ignore the .9 percent additional Medicare tax)?
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Omaheke ltd is considering purchasing or investing in a new machine, either machine x or machine y. however, a condition of capital rationing exits in the company (meaning due to avilability of funds they can either invest in machine x or machine y and not both) and hence the need for capital budgeting appraisal.
both machines would have an expected life of five years and would be depreciated on a straight line basis. the following information is availble
machine x
machine y
initial cost
450 000
560 000
residual value
50 000
60 000
accounting profits
Machine x
machine y
year 1
60 000
50 000
year 2
70 000
60 000
year 3
70 000
80 000
year 4
40 000
70 000
year 5
30 000
40 000
better limited cost of capital is 10% per annum for which the discount factors are
year 1 = 0.909
year 2 = 0.826
year 3 = 0.751
year 4 = 0.683
year 5 = 0.621
required
(a) for both machines x and y calculate
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