Problem 18-7 Tax shieldsSuppose that Congress sets the top personal tax rate on interest and dividends at 38% and the top rate on realized capitalgains at 20%. The corporate tax rate stays at 22%. Assume capital gains are half of equity income.a. Compute the difference between the total corporate plus personal taxes paid on debt and the total taxes on equity income ifall capital gains are realized immediately. (Do not round intermediate calculations. Round your answer to 4 decimal places.)Differenceb. Compute the difference between the total corporate plus personal taxes paid on debt and the total taxes on equity incomeif all capital gains are deferred forever. (Do not round intermediate calculations. Round your answer to 4 decimal places.)Difference

A) For $1 Debt income No corporate tax is levied on debt income Personal tax = .38 x $1…

Answered: Problem 18-7 Tax shields Suppose that…

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter3: Corporations: Introduction And Operating Rules

Section: Chapter Questions

Problem 52P

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LO.3, 4, 5 Contrast the income taxation of individuals and C corporations as to: a. Alternative minimum tax. b. Dividend income. c. Qualified business income deduction of 20 percent. d. Use of the cash method of accounting. e. Accounting period used for tax purposes. f. Applicable tax rates. g. Due date of the tax return.
1. Ch03 Financial Planning Exercise 4 Chapter 3 Financial Planning Exercise 4 Effect of tax credit vs. tax exemption By defining after-tax income, demonstrate the differences resulting from a $1,500 tax credit versus a $1,500 tax deduction for a single taxpayer in the 25% tax bracket with $41,000 of pre- tax income. Round your answers to two decimal places. (Use Exhibit 3.3.) Deduction $ Credit $
Problem 15-58 (LO 15-6) In each of the following independent cases for tax year 2022, determine the amount of business interest expense deduction and disallowed interest expense carryforward, if any. Assume that average annual gross receipts exceed $27 million. Required: a. Company A has ATI of $70,000 and business interest expense of $20,000. b. Company B has ATI of $90,000, business interest expense of $50,000, and business interest income of $2,000. c. Company C has taxable income of $50,000 which includes business interest expense of $90,000 and depreciation of $20,000. Note: For all requirements, leave no cells blank - be certain to enter "0" wherever required. Enter your answers in dollar values not in million of dollars. a. Company A b. Company B c. Company C Interest expense deduction Disallowed interest expense carryforward
B. %24 Mange Congress would like to increase tax revenues by 11.5 percent. Assume that the average taxpayer in the United States earns $62,000 and pays an average tax rate of 10 percent. a. If the income effect is in effect for all taxpayers, what average tax rate will result in a 11.5 percent increase in tax revenues? (Round your answer to 2 decimal places.) Answer is complete but not entirely correct. Average tax rate 11.50 X% b. This is an example of what type of forecasting? O Dynamic O Static 61°F re to search M Home F12 %23 41 3. P. F M
Rhodes Corporations financial statements are shown after part f. Suppose the federal-plus-state tax corporate tax is 25%. Answer the following questions. a. What is the net operating profit after taxes (NOPAT) for 2020? b. What are the amounts of net operating working capital for both years? c. What are the amounts of total net operating capital for both years? d. What is the free cash flow for 2020? e. What is the ROIC for 2020? f. How much of the FCF did Rhodes use for each of the following purposes: after-tax interest, net debt repayments, dividends, net stock repurchases, and net purchases of short-term investments? (Hint: Remember that a net use can be negative.) Rhodes Corporation: Income Statements for Year Ending December 31 (Millions of Dollars) Rhodes Corporation: Balance Sheets as of December 31 (Millions of Dollars)
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Question 5 (Manda Based on 2018 tax schedules, the first dollar of personal taxable income is taxed at which of the following marginal tax rates? a) 20.0% b) 10.0% c) 15.0% d) 5.0% Question 6 (Mandatory Based on 2018 tax schedules, the first dollar of corporate income is taxed at which of the following tax rates? a) 15.0% b) 21.0% c) 10.0% d) 25.0% Question 10 (Mar Which of the following is not a likely source of first-round financing during the survival stage of a venture's life cycle? a) family and friends b) venture capitalists c) suppliers and customers d) commercial banks
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9 Part 1 of 2 1.9 points [The following information applies to the questions displayed below.] Sandra would like to organize LAB (a legal corporation) as either an S corporation or a C corporation for tax purposes. In either form, the entity is expected to generate an 8 percent annual before-tax return on a $875,000 investment. Sandra's marginal income tax rate is 37 percent and her tax rate on qualified dividends and net capital gains is 20 percent. LAB's income is not qualified business income (QBI), so Sandra is not allowed to claim the QBI deduction. Assume that LAB will distribute all of its earnings after entity-level taxes every year. Ignore the additional Medicare tax and the net investment income tax when computing your answers. Note: Round your intermediate computations to the nearest whole dollar amount. Problem 04-51 Part a (Algo) a. How much cash after taxes would Sandra receive from her investment in the first year if LAB is organized as either an S corporation or a C…
35, Final withholding tax rate for interest from local currency deposits in non-bank institutions * a. 25% b. 30% c. 20% O d. Not subject to final tax 36. Rent Income in general is subject to a. Final Income Tax b. Regular Income Tax O c. Capital Gains Tax d. Donor's Tax

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