Question

You are a shareholder in a C corporation. The corporation earns $ 1.99$1.99 per share before taxes. Once it has paid taxes, it will distribute the rest of its earnings to you as a dividend. The corporate tax rate is 35 5%, and your personal tax rate on (both dividend and non-dividend) income is 30 0%. How much is left for you after all taxes are paid

Answer 1

$0.90 per share is left after all taxes are paid.

Step-by-step explanation:

This can be calculated as follows:

Corporate tax = Earning per share before corporate tax * Corporate tax rate = $1.99 * 35.5% = $0.71

Earning per share after corporate tax = $1.99 - $0.71 = $1.28

Personal tax = Earning per share after corporate tax * Personal tax rate = $1.28 * 30.0% = $0.39

Earning per share after all taxes = Earning per share after corporate tax - Personal tax = $1.28 - $0.39 = $0.90

Therefore, $0.90 per share is left after all taxes are paid.