Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. rover corporation would tike to transfer excess ca

Rover Corporation would tike to transfer excess cash to its sole shareholder, Aleshia, who is...

80.2K

Verified Solution

Question

Accounting

image
Rover Corporation would tike to transfer excess cash to its sole shareholder, Aleshia, who is also an employee. Aleshia is in the 24% tax bracket, and Rover is subject to a 21% rate. Because Aleshia's contribution to the business is substantial, Rover. believes that a $118,800 bonus in the current year is reasonable compensation and should be deductible by the corporation. However, Rover is considering payng Aleshia a $118,000 dividend because the tax rate on dividends is lower than the tax rate on compensation. Answer the following questions to determane whether Rover is correct in believing that a dividend is the better choice. a. Regarding taxes, which would benefit Aleshis the most? The $118,800 becouse after taxes she would have $ from the dridend and 1 from the bonus. b. Regarding taxes, which would benefit Rover Corporation the most? The $25,000 because it would save Rover 1 in taxes: c. Considering the two parties together, which alternative would provide the most overall tax savings? The 5118,800 because when the overall effect to both the corporation and the shareholder are cansidered the net tax savings. is 5

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

Physics
1.2K views

4 None of these An element have two isotopes having m and m The relative...

Chemistry
1.2K views

The following mechanism has been proprosed; i.HNO2+H+<--->H2O+NO+ (fast k1) ii. NH4+<-->NH3+H+ (fast k2) iii. NO+ + NH3-->NH3NO+ (slow...

Biology
1.2K views

When biotic potential is completely balanced with environmental resistance, the population ____A. increasesB. decreasesC. stabilizes

Physics
1.2K views

A force F Kx acts on a particle at an angle of 60 with the...

Statistics
1.2K views

annual Monaco Endurance Race This would be an improvement on the previously accepted value of...

Calculus
1.2K views

Evaluate the following limit lim 1 ax for positive constants a and b x 0...

Calculus
1.2K views

In each triangle below find sin A cos A sin B and cos B 7...

Algebra
1.2K views

f x 5x 5x 1 f 4 Be sure to simplify your answer Enter

Accounting
1.2K views

The cost structure of two firms competing in the same industry is represented...

Accounting
1.2K views

II) D-2 11) Rylan Industries is expected to pay a dividend...

Accounting
1.2K views

The following selected transactions relate to 2 days cash collections for a firm that maintains...

Accounting
1.2K views

On April 1, Jiro Nozomi created a new travel agency. Adventure Travel. The following transactions...