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Provisions of the U.S. Tax Code for Corporations and Individuals From a corporation's point of view, does the tax treatment of dividends and interest paid favor the use of debt financing or equity financing? Equity financing Debt financing Suppose a firm in the 40% federal-plus-state tax bracket needs to pay $1 in dividends to its shareholders. What is the pretax income it should have to pay this dividend? $1.67 O $1.00 Cute Camel Woodcraft Company owns 261,000 shares in the Lazy Zebra Furniture. If Lazy Zebra has 300,000 shares of common stock outstanding, can Cute Comel ple a single income tax return that reports the incomes and expenses of both companies? No, because cute Camel Woodcraft Company's ownership stake in Lazy zebra is tess than or equal to 49%, whereas som or more is required by the U.S. Tax Code Yes, because Cute Camel woodcraft Company's ownership stake in Lary Zebra is greater than or equal to 60%, as required by the U.S. Tax Code Yes, because Cute Camel woodcraft Company's ownership stake in tary Zebra is greater than or equal to 80%, as required by the U.S. Tax Code Assume that the tax rate on corporate taxable income up to 150,000 is 15%, and 25% for income levels between $50.001 and $75,000. If the Clumsy Chihuahua Music Company has a taxable income of $59,000, then it has a tax ability of and an average tax rate of Suppose you want to invest $10,000. You have two options Assume that the tax rate on corporate taxable income up to $50,000 is 15%, and 25% for income levels between $50,001 and $75,000. If the Clumsy Chihuahua Music Company has a taxable income of $59,000, then it has a tax liability of and an average tax rate of Suppose you want to invest $10,000. You have two options: Option #1: Invest in municipal bonds with an expected return of 13.00%, or Option #2: Invest in the corporate bonds of Jefferson & Alexander Inc. which are offering an expected return of 16.25% Assume that your decision is based solely on your tax situation. If everything else is the same for both bonds, at what tax rate would you be Indifferent between these two bond investments? 25.60% 22.00% 18.60% 20.00% For your personal portfolio, you purchased 1,000 shares of a foreign manufacturing company for $51.00 per share and sold it for $76.00 per share after 18 months. How will your gain or loss be treated when you file your towe? As a capital gain that will be taxed at the current ordinary income tax rate As a capital gain w be taxed at the capital gains tax rate

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