Graham is the sole shareholder of Logan Corporation. For the past five years, Logan has reported little
Question:
a. Calculate the additional income tax liability for Logan as a result of this constructive dividend treatment. (Ignore any payroll tax consequences.)
b. What are the tax consequences to Graham as a result of the constructive dividend treatment? Calculate the change in Graham’s income tax liability as a result of this change. Assume that Graham’s marginal tax rate on ordinary income is 39.6 percent. (Ignore any payroll tax consequences.)
c. Given your calculations, determine the total impact on Treasury tax collections as a result of this audit finding.
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
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Related Book For
Principles Of Taxation For Business And Investment Planning 2016 Edition
ISBN: 9781259549250
19th Edition
Authors: Sally Jones, Shelley Rhoades Catanach
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