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.)

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 3 years ago

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