Suppose Congress is expected to increase the corporate tax rate from 35% to 45% next year. RealNet.
Question:
Suppose Congress is expected to increase the corporate tax rate from 35% to 45% next year. RealNet. Com is scheduled to pay its CEO a salary of $1 million in the current period. The CEO’s tax rate is 40%. The CEO is also entitled to a bonus that is up to the discretion of the compensation committee. As an adviser to the compensation committee, compare and contrast the following tax-planning strategies. a. Do nothing. b. Defer a large part of the salary ($300,000) from the current period to the next period. c. Defer the bonus from the current period to the next period.
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a Firm obtains a deduction at 35 when could have obtained deduction at 45 as per below b After tax c…View the full answer
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