Question

You are a shareholder in a C corporation. The corporation earns $ 1.62$1.62 per share before taxes. Once it has paid taxes it will distribute the rest of its earnings to you as a dividend. Assume the corporate tax rate is 35 % and the personal tax rate on​ (both dividend and​ non-dividend) income is 20%. How?

Answer 1

$0.8424

Step-by-step explanation:

Corp Tax earnings: $1.62×35% = $0.567

After Tax Earnings: $1.62 - 0.648 = $1.053

Personal Tax (dividends): $1.053×20% = 0.2106

After all Taxes are paid: $1.053 - 0.2106 = $0.8424

So, $0.8424 amount left with you after payment of all the taxes.