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    Compare the tax burden for each entity and shareholder

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    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

    Solution Preview

    As a shareholder for S Corp, you get 100,000
    After taxes, you have 66000.
    You only pay the individual rate because the S ...

    Solution Summary

    The solution compares the tax burden for each entity and shareholder. How much money is left after all the taxes are paid is determined.