Ms. Xie, who is in the 37 percent tax bracket, is the sole shareholder and president of
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Question:
Ms. Xie, who is in the 37 percent tax bracket, is the sole shareholder and president of Xenon. The corporation’s financial records show the following.
Gross income from sales of goods ............................................ $1,608,000
Operating expenses .................................................................... (936,000)
Salary paid to Ms. Xie .................................................................. (306,000)
Dividend distributions ................................................................ (206,000)
a. Compute the combined tax cost for Xenon and Ms. Xie. (Ignore payroll tax.)
b. How would your computation change if Ms. Xie’s salary was $502,000 and Xenon paid no dividends?
Expert Answer:
A B 1 2 Particulars Amount 3 Gross income from sale of goods 1608000 4 Less Operating ... View the full answer
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