Rodger owns 100% of the shares in Trevor Inc., a C corporation. Assume the following for...

Rodger owns 100% of the shares in Trevor Inc., a C corporation. Assume the following for the current year: Trevor Inc.’s pre-tax income = $25,500 Percentage of after-tax earnings retained by Trevor Inc. = 0% (i.e. all after-tax earnings distributed) Rodger’s dividend tax rate = 15% Given these assumptions, how much cash does Rodger have from the dividend after all taxes have been paid? (Round your intermediate calculations and final answer to whole number dollar amount.)

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Expert Solution

CALCULATIN OF NET CASH TO RODGER FROM THE DIVIDEND AFTER ALL TAXES HAVE BEEN PAID
PRE TAX INCOME OF TREVOR INC.		A	$25,500
TAX ON TREVOR INC.'S INCOME	21% OF $25500	B	$5,355.00
BALANCE INCOME AVAILABLE FOR DIVIDEND		C=A-B	$20,145.00
DIVIDEND TAX @ 15% ON DIVIDEND	15% OF $20145	D	$3,021.75
NET CASH FROM DIVDIDEN TO RODGER AFTER ALL TAXES		E=C-D	$17,123.25

ekkarill92 answered 1 year ago

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