You are a shareholder in a corporation. The 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. the corporation tax rate is 40% and the personal tax rate on both dividend and non-dividend income is 30%.
A. How much is left for you after all taxes are paid?
B. Repeat above problem assumming the corporation is an S corporation.© BrainMass Inc. brainmass.com March 4, 2021, 10:23 pm ad1c9bdddf
A. Earnings before tax = $2.00 per share
Corporation Tax @40% = $0.80 per share
Earnings after corporation tax = $1.20 per share
Income received at the hand of the investor = $1.20 per ...
The solution calculates the amount of dividends from a corporation after tax.