Karl Trudell and Tucker Brinkman began a new consulting business on January 1, 2019. They organized the
Question:
Karl Trudell and Tucker Brinkman began a new consulting business on January 1, 2019. They organized the business as a C corporation, KT, Inc. During 2019, the corporation was successful and generated revenues of $2,400,000. KT had operating expenses of $725,000 before any payments to Karl or Tucker. During 2019, KT paid dividends to Karl and Tucker in the amount of $180,000 each. Assume that Karl's wife earned $130,000 from her job, they file a joint return, have itemized deductions of $40,000, and have no children. (Assume the qualified dividends tax rate is 15%.)
Requirement a. Compute the total tax liability of KT and Karl and his wife for 2019.
Requirement b. Instead of organizing the consulting business as a C corporation, assume Karl and Tucker organized the business as a limited liability company. KT. LLC. KT made a distribution of $180.000 each to Tucker during 2019. Compute the total tax liability of KT and Karl for 2019. Ignore any and additional tax on net investment income.
Intermediate Accounting IFRS
ISBN: 978-1119372936
3rd edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield