Question:1

Find a stock split and create and describe a scenario of your investment (when did you originally purchase and how many shares at what price, what did the stock split do to your investment, where there any tax consequences).

Why did the company split their stock and what happened since then to the valuation? Did you sell you stock, if so when at what price and where there any tax consequences? As always, pick a stock you are interested in, and it doesn't have to be a US stock.

Question:2

Sandra would like to organize LAB (a legal corporation) as either an S corporation or a C corporation for tax purposes. In either form, the entity is expected to generate an 8 percent annual before-tax return on a $775,000 investment. Sandra's marginal income tax rate is 37 percent and her tax rate on qualified dividends and net capital gains is 20 percent. LAB's income is not qualified business income (QBI), so Sandra is not allowed to claim the QBI deduction. Assume that LAB will distribute all of its earnings after entity-level taxes every year. Ignore the additional Medicare tax and the net investment income tax when computing your answers.

Note: Round your intermediate computations to the nearest whole dollar amount.

a.How much cash after taxes would Sandra receive from her investment in the first year if LAB is organized as either an S corporation or a C corporation?

b.What is the overall tax rate on LAB's income in the first year if LAB is organized as an S corporation or as a C corporation?

Question:3

1. What are the most common legal entities used for operating a business? How are these entities treated similarly and differently for state law purposes?