Question
Larissa is the sole owner of Theo Corp., which provides her only source of income. Larissa has always paid herself entirely by drawing dividends from
Larissa is the sole owner of Theo Corp., which provides her only source of income. Larissa has always paid herself entirely by drawing dividends from her corporation. Leslie suggested that as long as Larissa is earning about what she would have to pay someone else to run the business, she might be better off paying herself a salary instead of dividends, because she would avoid the problem of double taxation. If Theo Corp. earns $240,000 all of which she will pay to herself, how much will she take home under each method. Assume a corporate tax rate of 30%, and a personal tax rate of 25% on salary and 15% on dividend income.
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