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Question - Nittany Company pays its sole shareholder, Joe Papa, a salary of $100,000. At the end of each year, the company pays Joe a bonus equal to the difference between the corporation's taxable income for the year (before the bonus) and $75,000. In this way, the company hopes to keep its taxable income at amounts that are taxed at either 15 percent or 25 percent. This year, Nittany reported prebonus taxable income of $675,000 and paid Joe a bonus of $600,000. On audit, the IRS determined that individuals working in Joe's position earned on average $300,000 per year. The company had no formal compensation policy and never paid a dividend.
a. How much of Joe's bonus might the IRS recharacterize as a dividend?
b. Assuming the IRS recharacterizes $200,000 of Joe's bonus as a dividend, what additional income tax liability does Nittany Company face?
Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest. How much control does the Fed have over this longer real rate?
Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.
Accounting problems, Draw a detailed timeline incorporating the dividends, calculate the exact Payback Period b) the discounted Payback Period. the IRR, the NPV, the Profitability Index.
Term Structure of Interest Rates
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Prepare the bank reconciliation for company.
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Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.
Simple Interest, Compound interest, discount rate, force of interest, AV, PV
CAPM and Venture Capital
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