Homework Assignment Chapter 11

Homework Assignment Chapter 11 - Homework Assignment...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Homework Assignment Chapter 11 Tax Planning and Research C:11-29 a. What is Delta’s income tax liability assuming Carl withdraws none of the earnings from the C corporation? What is Carl’s income liability? What is the total tax liability for the corporation and its shareholders? 1. Delta’s income tax liability $41,750 2. Carl’s income tax liability is zero. 3. The total tax liability of the corporation and its shareholders is $41,750. b. Assume that Delta instead distributes $80,000 of its after-tax earnings to Carl as a dividend in the current year. What is the total income tax liability for the C corporation and its shareholder? 1. Even though Delta distributed dividends of $80,000 which does not affect its tax liability which remains the same $41,750. 2. Carl’s income tax liability is $5,498. c. How would you answer Part a if Carl withdrew $80,000 from the business in salary? Assume the corporation pays $6,000 of Social Security taxes on the salary, which it can deduct from the $150,000 taxable income amount in part a. Carl also pays $6,000 of Social Security taxes on the salary which he cannot deduct. 1. Delta’s income tax amount $11,000 Social Security tax 6,000 _ Total tax $17,000 Carl’s income tax liability ($80,000) $13,844 Social Security tax 6,000 _ Total tax liability $19,844 d. How would your answers to Parts a-c change if Delta were instead an S corporation? In order for Carl to receive an $80,000 dividend from the S corporation, the distribution
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 10/22/2011 for the course ACCOUNTING ACC565 taught by Professor Lindachess during the Spring '10 term at Strayer.

Page1 / 4

Homework Assignment Chapter 11 - Homework Assignment...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online