The Bling Corporation, a C corporation, is owned 100% by Dave Talbot and had taxable income in
Question:
The Bling Corporation, a C corporation, is owned 100% by Dave Talbot and had taxable income in 2019 of $515,000. Dave is also an employee of the corporation. In December 2019, the corporation has decided to distribute $430,000 to Dave and has asked you whether it would be better to distribute the money as a dividend or salary. Dave, a single taxpayer, is in the 37% marginal tax bracket. How would you respond to Bling Corporation? Consider only income taxes for this problem. (Dave's taxable income exceeds $434,550.) i (Click the icon to view the tax rates for 2019.)
Calculate the taxes for Bling and Dave under each option. (For the purpose of this analysis, we will only consider the marginal and capital gain rates for Dave. Ignore additional taxes imposed on high income taxpayers.)
Federal Taxation 2016 Comprehensive
ISBN: 9780134104379
29th edition
Authors: Thomas R. Pope, Timothy J. Rupert, Kenneth E. Anderson