Forward Corporation is owned by a group of 15 shareholders. During the current? year, ForwardForward pays $550,000 in salary and bonuses to AlvinAlvin?, its president and controlling shareholder. The? corporation's marginal tax rate is 34?%, and AlvinAlvin?'s marginal tax rate is 39.6?%. The IRS audits ForwardForward?'s tax return and determines
Forward Corporation is owned by a group of 15 shareholders. During the current? year, ForwardForward pays $550,000 in salary and bonuses to AlvinAlvin?, its president and controlling shareholder. The? corporation's marginal tax rate is 34?%, and AlvinAlvin?'s marginal tax rate is 39.6?%. The IRS audits ForwardForward?'s tax return and determines
Chapter19: Corporations: Distributions Not In Complete Liquidation
Section: Chapter Questions
Problem 23CE
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Forward Corporation is owned by a group of 15 shareholders. During the current? year, ForwardForward pays $550,000 in salary and bonuses to AlvinAlvin?, its president and controlling shareholder. The? corporation's marginal tax rate is 34?%, and AlvinAlvin?'s marginal tax rate is 39.6?%. The IRS audits ForwardForward?'s tax return and determines that reasonable compensation for Alvin is $350,000. ForwardForward agrees to the adjustment.
What effect does the disallowance of part of the salary and bonus deduction have on Forward?'s and Alvin?'s respective tax? positions? Ignore payroll? taxes, such as FICA. ?(Assume a? 23.8%
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ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT