A corporation earns $2 per share before taxes. Once it has paid taxes it will distribute the rest of its earnings to you as a dividend. There are 250,000 shares outstanding, you have owned 50,000 shares for >5 years. The corporate tax rate is 35%; the personal tax rate is 34% on ordinary income; and the dividend tax rate is 15%.
How much is left for you after all taxes are paid - first as a shareholder in a C corp. and secondly, as a shareholder in an S corporation.
Please show work in Excel.© BrainMass Inc. brainmass.com June 3, 2020, 10:22 pm ad1c9bdddf
As a shareholder for S Corp, you get 100,000
After taxes, you have 66000.
You only pay the individual rate because the S ...
The solution compares the tax burden for each entity and shareholder. How much money is left after all the taxes are paid is determined.