Marcus is the CEO of publicly traded ABC Corporation and earns a salary of $1,500,000. Assume ABC
Question:
Marcus is the CEO of publicly traded ABC Corporation and earns a salary of
$1,500,000. Assume ABC has a 35 percent marginal tax rate.
a) What is ABC’s after-tax cost of paying Marcus’s salary?
b) Now assume that Marcus, in addition to the $1.5 million salary, earns a performance-
based bonus of $500,000. What is ABC’s after-tax cost of paying Marcus’s salary?
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Related Book For 
McGraw-Hill's Taxation Of Individuals
ISBN: 9781259729027
2017 Edition
Authors: Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver
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