Margarita, whose marginal tax rate on ordinary income is 37 percent, owns 100 percent of the stock of Henley Corporation. This year, Henley generates $1 million of taxable income.

Required:

If Henley wants to pay all of its after-tax earnings to Margarita as a dividend, calculate the amount of the dividend payment.

Calculate Margaritas tax due on the dividend computed in part a, and her after-tax cash flow from the dividend receipt.

Compute the combined corporate and individual tax burden on Henleys $1 million of current year income, and the effective combined tax rate on this income.

A) amount of the dividend payment?

B) tax due on the dividend income? after-tax cash flow?

C) total tax burden? effective combined tax rate %?

Question

Margarita, whose marginal tax rate on ordinary income is 37 percent, owns 100 percent of the stock of Henley Corporation. This year, Henley generates $1 million of taxable income.

Required:

If Henley wants to pay all of its after-tax earnings to Margarita as a dividend, calculate the amount of the dividend payment.

Calculate Margaritas tax due on the dividend computed in part a, and her after-tax cash flow from the dividend receipt.

Compute the combined corporate and individual tax burden on Henleys $1 million of current year income, and the effective combined tax rate on this income.

A) amount of the dividend payment?

B) tax due on the dividend income? after-tax cash flow?

C) total tax burden? effective combined tax rate %?

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Question

Margarita, whose marginal tax rate on ordinary income is 37 percent, owns 100 percent of the stock of Henley Corporation. This year, Henley generates $1

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