Homework_Set_7 - Homework Set#7 Dr Judd Tax 4001 Fall 2010...

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Homework Set #7 Dr. Judd Tax 4001 Fall 2010 1. Jon is the sole owner of All-Star Enterprises. The company earned net operating income of $83,000 during 2009 and had a LTCL of $8,000. He withdrew $43,500 of the profit from All-Star during the year. How should he report this information if All-Star is: a. A proprietorship? b. A C Corp? c. A S Corp? 2. Altec Company had at $350,000 net profit from operations in 2009 and paid Shelly, its sole shareholder, a dividend of $231,000 ($350,000 – $119,000 corporate tax). She has a large amount of income from other sources and is in the 35% marginal tax bracket. Would her tax situation be better or worse if Altec were a proprietorship and she withdrew $231,000 from the business during the year? 3. In each of the following independent situation, determine the dividends received deduction. Assume that none of the corporate shareholders owns a 20% or more of the stock in the corporations paying dividends. Red Corp. White Corp Blue Corp Income from Operations $350,000 $1,200,000 $1,500,000 Expenses from Operations ($300,000) ($1,350,000) ($1,580,000) Qualifying Dividends $50,000 $300,000 $400,000 4.
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