3. Sundar Pichai, the CEO of Alphabet Inc., earns most of his income from his investments....

 

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3. Sundar Pichai, the CEO of Alphabet Inc., earns most of his income from his investments. He owns $20 million in publicly traded stock that he bought for $5 million. He also owns a $5 million home he bought for $3 million. His investment income faces a tax rate of 20% which is well below the 39.6% marginal rate imposed on his wage income. Lupita Nyong'o, a famous Hollywood actress faces the same capital gains tax rates and marginal tax rates as Mr. Pichai a. For the last $100,000 that each of them earned (Mr. Pichai on his investments, Ms. Nyong'o from her work in movies). What was their tax bill? (4 points) b. Explain two reasons that are used to rationalize a lower rate on capital gains income relative to wage income? Give details. (4 points) i. ii. c. Leave Blank i. Leave Blank ii. Leave Blank d. If Mr. Pichai were to die today and leave his daughter Kavya everything, what would be the total capital gains tax burden that Kavya would have to pay? (describe in words if enough data is not provided)? i. If she moved into his house and held his stock? (4 points) ii. If she sold all of his assets after a year when the house was worth $6 million, the stocks were worth $25 million and took a trip around the world? (4 points) iii. What would be the estate tax liability on Kavya just after he died, assume an exclusion of $2 mill and an estate tax rate of 40%? (4 points) e. There are tax advantages for a corporation of using equity financing over debt financing. i. How is a dollar earned taxed when debt financing is used by a corporation? Explain in detail. (6 points) ii.How is a dollar earned taxed when equity financing is used by a corporation? Explain in detail. (6 points) 3. Sundar Pichai, the CEO of Alphabet Inc., earns most of his income from his investments. He owns $20 million in publicly traded stock that he bought for $5 million. He also owns a $5 million home he bought for $3 million. His investment income faces a tax rate of 20% which is well below the 39.6% marginal rate imposed on his wage income. Lupita Nyong'o, a famous Hollywood actress faces the same capital gains tax rates and marginal tax rates as Mr. Pichai a. For the last $100,000 that each of them earned (Mr. Pichai on his investments, Ms. Nyong'o from her work in movies). What was their tax bill? (4 points) b. Explain two reasons that are used to rationalize a lower rate on capital gains income relative to wage income? Give details. (4 points) i. ii. c. Leave Blank i. Leave Blank ii. Leave Blank d. If Mr. Pichai were to die today and leave his daughter Kavya everything, what would be the total capital gains tax burden that Kavya would have to pay? (describe in words if enough data is not provided)? i. If she moved into his house and held his stock? (4 points) ii. If she sold all of his assets after a year when the house was worth $6 million, the stocks were worth $25 million and took a trip around the world? (4 points) iii. What would be the estate tax liability on Kavya just after he died, assume an exclusion of $2 mill and an estate tax rate of 40%? (4 points) e. There are tax advantages for a corporation of using equity financing over debt financing. i. How is a dollar earned taxed when debt financing is used by a corporation? Explain in detail. (6 points) ii.How is a dollar earned taxed when equity financing is used by a corporation? Explain in detail. (6 points)

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a For last 100000 of income Mr Pichai Tax 100000 20 20000 Ms Nyongo Tax 100000 396 39600 Note Curren... View the full answer