a. Compute Sigma and Brianâ€™s 2008 taxable income and total tax liability, as well as their combined tax liability. Also calculate the corporations current E & P after the dividend distribution. b. Assume instead that Brian operates Sigma as a sole proprietorship. In the current year, the business reports the same operating results as above, and Brian withdraws $140,000 in lieu of the salary dividend. Assume Brianâ€™s self employment tax is $17,000. Compute Brianâ€™s total tax liability for 2008. c. Assume a C corporation such as in part a distributes all of its after-tax earnings. Compare the tax treatment of long-term capital gains, tax-exempt interest, operating profits if earned by a C corporation with the tax treatment of these items if earned by a sole proprietorship.
There are no reviews yet.