You are a shareholder in a C corporation. The corporation earns $ 2.41 per share before...

You are a shareholder in a C corporation. The corporation earns $ 2.41 per share before taxes. Once it has paid taxes it will distribute the rest of its earnings to you as a dividend. Assume the corporate tax rate is 35 % and the personal tax rate on (both dividend and non-dividend) income is 30 %. How much is left for you after all taxes are paid?

Expert Solution

The corporation earns $2.41

The amount of corporate taxes paid is :

= $2.41 * 0.35

= $0.8435

The amount left after paying the corporate taxes,

= $2.41 - $0.8435

= $1.5665

The amount of personal taxes paid is :

= $1.5665* 0.3

= $0.47

So, the amount left after paying for the personal taxes are,

= $1.5665 - $0.47

= $1.0966

So, the amount left for me is $1.1 (rounded off to the nearest cent).

jeff jeffy answered 2 years ago

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