Pedro, who is in the 24% tax bracket, is the sole shareholder of a corporation and receives

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Pedro, who is in the 24% tax bracket, is the sole shareholder of a corporation and receives a salary of $60,000 each year. To avoid double taxation, he makes an S election for the corporation. The corporation currently is earning $100,000, and he expects earnings to grow at a rate between 15% and 20% per year. The earnings are reinvested in the growth of the corporation, and no plans exist for distributions to Pedro. What problem may Pedro have created by making the S election?

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South-Western Federal Taxation 2022 Corporations, Partnerships, Estates And Trusts

ISBN: 9780357519240

45th Edition

Authors: William A. Raabe, James C. Young, Annette Nellen, William H. Hoffman

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Question Posted: May 14, 2023 04:39 AM

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Pedro, who is in the 24% tax bracket, is the sole shareholder of a corporation and receives

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A C corporation is subject to double taxation only if it makes distributions to the shareholders Sin...View the full answer

South-Western Federal Taxation 2022 Corporations, Partnerships, Estates And Trusts

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