Final answer:
The question addresses the tax liabilities for a closely-held company and its director/shareholder across scenarios with varying salary, shares, and dividend distributions, applying a flat 34% corporate income tax rate and considering individual income taxes on the director's compensation.
Step-by-step explanation:
The question involves calculating the tax liability for a closely-held company and its director/shareholder in different scenarios of salary and dividend payments. According to the given tax rate structure, a flat 34% tax rate applies on incomes from $335,000 to $10,000,000, which will affect the company's tax liability. It's essential to consider both corporate income tax on the company's profits and the individual income tax on the director/shareholder's salary when calculating total tax liability. Additionally, shareholder liability in terms of dividends is limited to the value of their shares.
In each scenario, the director/shareholder receives a different combination of salary and dividends or shares. The exact tax liabilities can be calculated by applying the appropriate tax rates to each form of income. For example, in the first scenario, if the director/shareholder receives a salary of $6,500,000, the company's taxable income would be reduced by that amount, subject to corporate tax on the remainder, while the director would be subject to individual income tax on the salary received. The following scenarios involve a combination of salary, shares, and dividends, which will have different tax implications for both the company and the individual.