Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. mr. wise, who is in the 37 percent tax bracket, is

Mr. Wise, who is in the 37 percent tax bracket, is the sole shareholder of...

90.2K

Verified Solution

Question

Accounting

Mr. Wise, who is in the 37 percent tax bracket, is the sole shareholder of Bobs Inc., which manufactures greeting cards. Bob's average annual net profit (before deduction of Mr. Wise's salary) is $320,000. For each of the following cases, compute the income tax burden on this profit. Assume that all dividends are taxed to individuals at a 20% tax rate.(Ignore any payroll tax consequences.)

Required:

A. Mr. Wise's salary is $100,000 and Bob distributes its after-tax income as a dividend.

B. Bob is an A corporation. Mr. Bob's salary is $100,000 and Bob makes no cash distributions.

C. Bob is an A corporation. Mr. Wise's salary is $100,000 and Bob makes no cash distributions. Assume Bob's ordinary income qualifies for the 20 percent QBI deduction, subject to no limitations

D. Bob is an A corporation. Mr. Wise draws no salary, and Bob makes no cash distributions. Assume Bob's ordinary income qualifies for the 20 percent QBI deduction, subject to no limitations.

E. Bob is an A corporation. Mr. Wise draws no salary, and Bob makes cash distributions of all its income to Mr. Wise. Assume Bob's ordinary income qualifies for the 20 percent QBI deduction, subject to no limitations.

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students