Question

2.You are a shareholder in an S corporation. The corporation earns $2.07 per share before taxes. As a pass through entity, you will receive $2.07 for each share that you own. Your marginal tax rate is 20%. How much per share is left for you after all taxes are paid

Answer 1

1.66

Step-by-step explanation:

From the question above, S corporation earns $2.07 per share before taxes are paid.

$2.07 is received for each share

The marginal tax rate is 20%

= 20/100

= 0.2

Therefore, the amount of shares that is left after payment of taxes can be calculated as follows

Amount of shares left= Price per share-(Price per share×tax rate)

= $2.07-($2.07×0.2)

= $2.07-0.414

= 1.66

Hence the amount of shares left after taxes have been paid is 1.66