Reference no: EM131013806
1) Consider a C corporation. The corporation earns $5 per share before taxes. After the corporation has paid its corresponding taxes, it will distribute 0% of its earnings to its shareholders as a dividend. The corporate tax rate is 40%, the tax rate on dividend income is 28%, and the personal income tax rate is set at 28%.
a) What are the shareholder's earnings from the corporation after all corresponding taxes are paid?
b) How much is the total effective tax rate on the corporation earnings?
2) Consider a S corporation. The corporation earns $5 per share before taxes. The corporate tax rate is 40%, the tax rate on dividend income is 28%, and the personal income tax rate is set at 28%.
a) What are the shareholder's earnings from the corporation after all corresponding taxes are paid?
b) How much is the total effective tax rate on the corporation earnings?
(Please SHOW WORK and put your answers in strictly numerical terms. For example, if the answer is 5%, enter 0.05 as an answer; or if the answer is $500, write enter 500 as an answer.)
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