Mr. Lion, who is in the 37 percent tax bracket, is the sole shareholder of Toto Inc, which menufactures greeting cards. Toto's average annual net profit (before deduction of Mr. Lion's salary) is $270.000. For each of the following cases, compute the income tax burden on this profit. Assume thet all dividends are taxed to individuals at a 20% tax rete. (gnore any payroll tax consequences) Required: a. Mr. Lion's selary is $100.000, and Toto pays no dividends. b. Mr. Lion's salory is $100,000, and Toto distributes its after-tax income as a dividend. c. Toto is an S corporation. Mr. Lion's salary is $19o.000, and Toto makes no cash distributions. Assume Toto's ordinary income qualifies for the 20 percent QBI deduction, sullject to no limitations d. Toto is an S corporation. Mr. Lion draws no salary, and Toto makes no cash distributions. Assume Toto's ordinary income qualifes for the 20 percent QBi deduction, subject to no limitations e. Toto is an S corporation. Mr. Lion draws no salary, and Toto makes cash distributions of all its income to Mr Lion Assume Toto's ordinary income quelifies for the 20 percent QBi deduction, subject to no limitations Amount a Income tax burden on this profit b Income tax burden on this proft CIncome tax burden on this proft d Income tax burden on this proft e Income tax burden on this profit
Mr. Lion, who is in the 37 percent tax bracket, is the sole shareholder of Toto Inc, which menufactures greeting cards. Toto's average annual net profit (before deduction of Mr. Lion's salary) is $270.000. For each of the following cases, compute the income tax burden on this profit. Assume thet all dividends are taxed to individuals at a 20% tax rete. (gnore any payroll tax consequences) Required: a. Mr. Lion's selary is $100.000, and Toto pays no dividends. b. Mr. Lion's salory is $100,000, and Toto distributes its after-tax income as a dividend. c. Toto is an S corporation. Mr. Lion's salary is $19o.000, and Toto makes no cash distributions. Assume Toto's ordinary income qualifies for the 20 percent QBI deduction, sullject to no limitations d. Toto is an S corporation. Mr. Lion draws no salary, and Toto makes no cash distributions. Assume Toto's ordinary income qualifes for the 20 percent QBi deduction, subject to no limitations e. Toto is an S corporation. Mr. Lion draws no salary, and Toto makes cash distributions of all its income to Mr Lion Assume Toto's ordinary income quelifies for the 20 percent QBi deduction, subject to no limitations Amount a Income tax burden on this profit b Income tax burden on this proft CIncome tax burden on this proft d Income tax burden on this proft e Income tax burden on this profit
Chapter19: Corporations: Distributions Not In Complete Liquidation
Section: Chapter Questions
Problem 48P
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Transcribed Image Text:Mr. Lion, who is in the 37 percent tax bracket, is the sole shareholder of Toto Inc. which manufactures greeting cards. Toto's average
annual net profit (before deduction of Mr. Lion's salary) is $270,000. For each of the following cases, compute the income tax burden
on this profit. Assume that all dividends are taxed to individuals at a 20% tax rate. (Ignore any payroll tax consequences)
Required:
a. Mr. Lion's salary is $100.000, and Toto pays no dividends.
b. Mr. Lion's salary is $100,000, and Toto distributes its after-tax income as a dividend.
c. Toto is an S corporation. Mr. Lion's salary is $190.000, and Toto makes no cosh distributions. Assume Toto's ordinary income
qualifies for the 20 percent QBI deduction, sullject to no limitations.
d. Toto is an S corporation. Mr. Lion draws no salary, and Toto makes no cash distributions. Asume Toto's ordinary income quelifies for
the 20 percent QBI deduction, subject to no limitations.
e. Toto is on S corporation. Mr. Lion draws no salary, and Toto makes cash distributions of all its income to Mr. Lion. Assume Toto's
ordinary income quelifies for the 20 percent QBi deduction, subject to no limitations.
Amount
a Income tax burden on this proft
b. Income tax burden on this proft
c. Income tax burden on this profit
d. Income tax burden on this proft
e. Income tax burden on this profit
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ISBN:
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Author:
Hoffman
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CENGAGE LEARNING - CONSIGNMENT