You are a shareholder in an S corporation. The corporation earns $2.49 per share before taxes....

You are a shareholder in an S corporation. The corporation earns $2.49 per share before taxes. As a pass-through entity, you will receive $2.49 for each share that you own. Your marginal tax rate is 25%. How much per share is left for you after all taxes are paid?

The amount that remains is ____ per share. (Round to the nearest cent.)

Expert Solution

If it is a pass through entity, the income is not taxed at the company level and taxed only at the owner level at his rate of income taxes. Therefore double taxation is avoided.

So the tax on 2.49 income will be 25% and after tax income will be 75%

So remaining amount = 0.75 x 2.49 = $1.8675

jeff jeffy answered 2 years ago

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