Part III: Continuing Expansions

A few years after the subsequent expansion, Gonzales wants to start a new company that will sell authentic sports memorabilia. He plans to name the company Pro Athlete Remembrances, or PAR for short. The new business is still in the planning stages, so he has a few questions about how PAR should be organized when he starts the business and what he should do if the company becomes extremely successful in the future. Assume that you are hired to answer the following questions:

c. Assume Mr. Gonzales successfully convert the business to a corporation. This corporation has $100,000 of taxable income from operations plus $5,000 of interest income and $100,000 of dividend income. During the previous year, the company paid dividends equal to $8,000. What is its tax liability?

No tax rate provided.