Question: An established corporation currently pays out 50 of earnings as
An established corporation currently pays out 50% of earnings as dividends. The CFO asks you whether it is tax advantageous for the corporation to pay dividends to shareholders other than corporations. How did the 1986 Tax Act affect these calculations?
Answer to relevant QuestionsLet us assume, as was true of wealthy individuals in the United States in the 1960s, that the personal tax rate is 70% and that realized capital gains are taxed at half the top personal tax rate— that is, tcg = 35%. Assume ...What is clientele based arbitrage? Provide an example of such a strategy. Is clientele based arbitrage restricted to high tax bracket taxpayers? Capital investment in many countries is tax favored. For example, in 1989, Singapore allowed a 100% tax depreciation write off in the year of purchase for certain automated production equipment. Similar tax treatment was ...Calculate the implicit and explicit tax rates for the following three assets. The required pretax total rate of return Ro for each asset is: 15% for the fully taxable asset, 20% for the partially taxable asset, and 10% for ...Assume you face a progressive tax rate system. Show that it does not pay for you to reduce your explicit tax rate on fully taxable income to below the implicit tax rate on tax exempt securities. Under what conditions would ...
Post your question