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mario62 [17]
3 years ago
10

"Consider a C corporation. The corporation earns $2.5 per share before taxes. After the corporation has paid its corresponding t

axes, it will distribute 50% of its earnings to its shareholders as a dividend. The corporate tax rate is 30%, the tax rate on dividend income is 20%, and the personal income tax rate is set at 28%. What are the shareholders earnings from the corporation after all corresponding taxes are paid
Business
1 answer:
Advocard [28]3 years ago
4 0

Answer:

$0.70 per stock

Explanation:

before tax corporate income = $2.50 per stock

after tax corporate income = $2.50 x (1 - 30%) = $1.75 per stock

distributed dividends = $1.75 x 50% = $0.875 per stock

since the tax rate on dividends is 20%, then the after tax gain earned by stockholders is $0.875 x (1 - 20%) = $0.70 per stock

Some dividends are taxed as long term capital gains (like these), which decreases the tax rate paid by stockholders. If they were taxed at the normal income rate, the tax rate would have been 8% higher.

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Shuster’s lease of retail premises from Thurgood requires Shuster to pay certain fees, subject to the landlord’s proof of the co
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Which animals in the food web are secondary consumer ?​
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Selling. general, and administrative expenses were $80,000, net sales were $390,000, interest expense was $16.000: research and
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Answer:

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<u></u>

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