After several years of profitable operations, Javell, the sole shareholder of JBD Inc , a C corporation, sold 18 percent of her JBD stock to ZNO Inc , a C corporation in a similar industry During the current year JBD reports $1,000,000 of after tax income JBD distributes all of its after tax earnin...

According to IRC 243a corporations are generally entitled to a 70 percent div ...

After several years of profitable operations, Javell, the sole shareholder of JBD Inc., a C corporation, sold

Question:

After several years of profitable operations, Javell, the sole shareholder of JBD Inc., a C sold 18 percent of her JBD stock to ZNO Inc., a C in a similar industry. During the current year JBD reports $1,000,000 of after-tax income. JBD distributes all of its after-tax earnings to its two shareholders in proportion to their shareholdings. Assume ZNO's marginal tax rate is 35 percent. How much tax will ZNO pay on the it receives from JBD? What is ZNO's overall tax rate on its income?
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...