Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The Bling Corporation, a C corporation, is owned 100% by James Dent and had taxable income in 2018 of $530,000. James is also an employee

image text in transcribed

The Bling Corporation, a C corporation, is owned 100% by James Dent and had taxable income in 2018 of $530,000. James is also an employee of the corporation. In December 2018, the corporation has decided to distribute $450,000 to James and has asked you whether it would be better to distribute the money as a dividend or salary. James, a single taxpayer, is in the 37% marginal tax bracket. How would you respond to Bling Corporation? Consider only income taxes for this problem. (James's taxable income exceeds $425,800.) A (Click the icon to view the tax rates for 2018.) Calculate the taxes for Bling and James under each option. (For the purpose of this analysis, we will only consider the marginal and capital gain rates for James. Ignore additional taxes imposed on high income taxpayers.) Distributed as dividend Distributed as salary Taxes for Bling Taxes for James Total tax liability The Bling Corporation, a C corporation, is owned 100% by James Dent and had taxable income in 2018 of $530,000. James is also an employee of the corporation. In December 2018, the corporation has decided to distribute $450,000 to James and has asked you whether it would be better to distribute the money as a dividend or salary. James, a single taxpayer, is in the 37% marginal tax bracket. How would you respond to Bling Corporation? Consider only income taxes for this problem. (James's taxable income exceeds $425,800.) A (Click the icon to view the tax rates for 2018.) Calculate the taxes for Bling and James under each option. (For the purpose of this analysis, we will only consider the marginal and capital gain rates for James. Ignore additional taxes imposed on high income taxpayers.) Distributed as dividend Distributed as salary Taxes for Bling Taxes for James Total tax liability

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Personal Finance A Practical Approach

Authors: Jane King, Mary Carey

1st Edition

0199668833, 9780199668830

More Books

Students also viewed these Finance questions

Question

=+2. Are you happy to pay a price premium for CSR products?

Answered: 1 week ago