James, who is in the 35 percent marginal tax bracket, owns 100 percent of the stock of JJ Inc This year, JJ generates $500,000 taxable income and pays a $100,000 dividend to James Compute his tax on the dividend under each of the following assumptions a The federal tax rules currently in effect app...

a James tax on the 100000 dividend is 15000 100000 15 b The 100000 dividend consists of aftertax ...

James, who is in the 35 percent marginal tax bracket, owns 100 percent of the stock of

Question:

James, who is in the 35 percent marginal tax bracket, owns 100 percent of the stock of JJ Inc. This year, JJ generates $500,000 taxable income and pays a $100,000 to James. Compute his tax on the under each of the following assumptions:
a. The federal tax rules currently in effect apply to the payment.
b. The federal tax system has been amended to allow shareholders to gross up income by the corporate tax paid with respect to the and credit this tax against their individual tax.
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...