You own 100 shares of a Sub Chapter "S" corporation. The corporation earns $4.00 per share before taxes. Once the corporation has paid any corporate taxes that are due, it will distribute the rest of its earnings to its shareholders in the form of a dividend. If the corporate tax rate is 40% and your personal tax rate on (both dividend and non-divi dend) income is 25%, then how much money is left for you after all taxes have been paid?

Question

Kaeden

Business

28 October, 02:22

You own 100 shares of a Sub Chapter "S" corporation. The corporation earns $4.00 per share before taxes. Once the corporation has paid any corporate taxes that are due, it will distribute the rest of its earnings to its shareholders in the form of a dividend. If the corporate tax rate is 40% and your personal tax rate on (both dividend and non-divi dend) income is 25%, then how much money is left for you after all taxes have been paid?

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Paul · Answer 1

Then how much money is left for you after all taxes have been paid?

Money left =

Earnings per share * number of shares * (1-Corporate tax rate) * (1-Individual tax rate = 4*100 * (1-40%) (1-25%) = 180

So the amount of money left is $180