Help with questions 2-3 please. U.S 2018 tax laws apply.

2. a. You have a client and they formed a corporation with 5 of their friends. All of the people were required to put in $50,000 or assets valued at the same into the company, but only 1 was going to work full time for the company. What is the tax effect to the contributors and what rate would they be taxed at for this transaction? b. Gusto Cars, Inc. has been having a terrible year this year. In the current year, they are scheduled to make only $1.5 million net income, but the heads of the company realize this is primarily due to an accounting change costing them roughly 30 million in income. Sales are going well and the company expects to rebound from this going forward, however, Gusto has held a constant 3.5% payout on its dividend, and without a significant market drop, this means they will have to pay out roughly 5 million in dividends. They have an accumulated earnings and profit of 20 million. What will be the tax effect to shareholders assuming the entire dividend is paid out? C. Assume the same facts above, but the company has no accumulated earnings and profits. Also assume all shareholders have sufficient basis in their stock. 3. A-Co, Inc has acquired a 40% interest in New-Co, Inc. as a result of its deal exiting out of the Northeastern market. New-Co, Inc. operates in the Southwest, where A-Co, Inc. is seeking to expand its operations of fast food chains. New-Co is expecting to pay out dividends in at around $1 million each year, as it has done so in previous years. a. What is the dividends received deduction (percentage and actual amount assuming he 1 million dividends holds) b. What code section is the primary source of the dividends received deduction? 2. a. You have a client and they formed a corporation with 5 of their friends. All of the people were required to put in $50,000 or assets valued at the same into the company, but only 1 was going to work full time for the company. What is the tax effect to the contributors and what rate would they be taxed at for this transaction? b. Gusto Cars, Inc. has been having a terrible year this year. In the current year, they are scheduled to make only $1.5 million net income, but the heads of the company realize this is primarily due to an accounting change costing them roughly 30 million in income. Sales are going well and the company expects to rebound from this going forward, however, Gusto has held a constant 3.5% payout on its dividend, and without a significant market drop, this means they will have to pay out roughly 5 million in dividends. They have an accumulated earnings and profit of 20 million. What will be the tax effect to shareholders assuming the entire dividend is paid out? C. Assume the same facts above, but the company has no accumulated earnings and profits. Also assume all shareholders have sufficient basis in their stock. 3. A-Co, Inc has acquired a 40% interest in New-Co, Inc. as a result of its deal exiting out of the Northeastern market. New-Co, Inc. operates in the Southwest, where A-Co, Inc. is seeking to expand its operations of fast food chains. New-Co is expecting to pay out dividends in at around $1 million each year, as it has done so in previous years. a. What is the dividends received deduction (percentage and actual amount assuming he 1 million dividends holds) b. What code section is the primary source of the dividends received deduction