Payroll taxes and the medicare contribution tax

Assignment Help Financial Accounting

Reference no: EM13747713

For the current year, Maple Corporation, a C corporation, reports taxable income of $265,000 before paying salary to its sole shareholder, Diane. Diane’s marginal tax rate on ordinary income is 35 percent and 15 percent on dividend income. If Maple pays Diane a salary of $200,000 but the IRS determines that Diane’s salary in excess of $125,000 is unreasonable compensation, what is the amount of the overall tax (corporate level + shareholder level) on Maple’s $265,000 presalary income? Assume Maple’s tax rate is 35 percent and it distributes all after-tax earnings to Diane. Ignore payroll taxes, the Medicare Contribution Tax, and the Additional Medicare Tax.

A. Overall tax (corporate level + shareholder level)

Reference no: EM13747713

Questions Cloud

Compute cash flows from operating activities-indirect method : Compute cash flows from operating activities—indirect method-The accounting records of Michigan Fur Traders include these accounts:

Explain advantages and disadvantages of a corporation : (Learning Objective 1: Explain advantages and disadvantages of a corporation) What are two main advantages that a corporation has over a proprietorship and a partnership? What are two main disadvantages of a corporation?

Investing and financing amounts for statement of cash flow : Compute the following items for the statement of cash flows: Beginning and ending Plant Assets, Net, are $99,000 and $92,000, respectively. Depreciation for the period was $11,000, and purchases of new plant assets were $23,000. Plant assets were sol..

Memorandum informing them of steps in forming corporation : Jessica Johnson and Claudia Stein are opening a Submarine’s deli. Johnson and Stein need outside capital, so they plan to organize the business as a corporation. They come to you for advice. Write a memorandum informing them of the steps in forming a..

Payroll taxes and the medicare contribution tax : For the current year, Maple Corporation, a C corporation, reports taxable income of $265,000 before paying salary to its sole shareholder, Diane. Diane’s marginal tax rate on ordinary income is 35 percent and 15 percent on dividend income.

Determine companys predetermined overhead application rate : Athena Corporation uses a job-cost system and applies manufacturing overhead to products on the basis of machine hours. The company's accountant estimated that overhead and machine hours would total $800,000 and 50,000, respectively, for 20x1. Determ..

What is the amount of fixed costs : For 2014, Hyper Company sold 80,000 units at a selling price of $20 per unit. Variable cost per unit was $12, and net income for the year was $40,000. What is the amount of fixed costs? Please show work.

What is the breakeven point in units : A product has a contribution margin ratio of 50% and selling price of $12 per unit. Fixed costs are $15,000. Assuming the company increases the selling price to $16 and doubles fixed costs, what is the breakeven point in units? Please show me the wor..

Choose two companies from the same industry : Choose two companies from the same industry: one that is quite successful and one that is struggling. For each company, list every strength and weakness you believe it possesses (both the company and its products).

User Account

All Pages