Purple Company has $200,000 in net income for 2019 before deducting any compensation or other payment to its sole owner, Kirsten. Kirsten is single and she claims the $12,200 standard deduction for 2019. Purple Company is Kirsten's only source of income.
Ignoring any employment tax considerations, compute Kirsten's after-tax income for each of the following situations.
Access the 2019 individual tax rate schedule to use for this problem. Assume the corporate tax rate is 21%.
When required, carryout intermediate tax computations to the nearest cent and then round your final tax liability to the nearest dollar.
b. Purple Company is a C corporation and the corporation pays out all of its after-tax income as a dividend to Kirsten.
Note: Individual taxpayers received preferential treatment regarding the taxation of qualified dividends (0%,15%,20%). For single taxpayers, the 0 percent rate applies to the first $38,600 of taxable income.
What is Purple Corporations' after tax income annd Kristen's after tax income?
Computation of tax payable by Purple Co. and income | |
available for distribution as Dividend | |
Net income of Purple Company for 2019 | $200,000 |
Less: Corporate tax @ 21% | $42,000 |
Net income available for distribution as dividend | $158,000 |
The tax rate for C corporation dividends are as under | |
$ 0 to $ 38,600 | Nil |
$ 38,600 to $ 425,800 | 15% |
$ 425,801 and above | 20% |
Computation of tax payable by Kirsten | |
Dividend income of Kirsten for 2019 | $158,000 |
Less: Standard Deduction | ($12,200) |
Taxable income | $145,800 |
Income tax @ 15% | $21,870 |
Computation of Net Income after Tax | |
Purple Company | |
Net Income | $200,000 |
Less: Corporation Tax | $42,000 |
Net Income after Tax | $158,000 |
Kirsten | |
Net Income | $158,000 |
Less: Corporation Tax | $21,870 |
Net Income after Tax | $136,130 |
Purple Company has $200,000 in net income for 2019 before deducting any compensation or other payment...
Purple Company has $200,000 in net income for 2019 before deducting any compensation or other payment to its sole owner, Kirsten. Kirsten is single and she claims the $12.200 standard deduction for 2019. Purple Company is Kirsten's only source of income. Ignoring any employment tax considerations, compute Kirsten's after-tax income for each of the following situations. Click here to access the 2019 individual tax rate schedule to use for this problem. Assume the corporate tax rate is 21%. When required,...
Purple Company records $200,000 in net income for 2019 before deducting any compensation or other payment to its sole owner, Kirsten. Kirsten is single and she claims the $12,200 standard deduction. Purple Company is Kirsten's only source of income. Ignoring any employment tax considerations, compute Kirsten's after-tax income for each of the following situations. Click here to access the 2019 individual tax rate schedule to use for this problem. Assume the corporate tax rate is 21%. When required, carryout intermediate...
Purple Company has $200,000 in net income for 2018 before deducting any compensation or other payment to its sole owner, Kirsten. Kirsten is single and she claims the $12,000 standard deduction for 2018. Purple Company is Kirsten's only source of income. Ignoring any employment tax considerations, compute Kirsten's after-tax income for each of the following situations. Assume the corporate tax rate is 21%. When required, carryout intermediate tax computations to the nearest cent and then round your final tax liability...
Purple Company has $200,000 in net income for 2018 before deducting any compensation or other payment to its sole owner, Kirsten. Kirsten is single and she claims the $12,000 standard deduction for 2018. Purple Company is Kirsten's only source of income. Ignoring any employment tax considerations, compute Kirsten's after-tax income for each of the following situations. Click here to access the 2018 individual tax rate schedule to use for this problem. Assume the corporate tax rate is 21%. When required,...
Purple Company has $200,000 in net income for 2018 before deducting any compensation or other payment to its sole owner, Kirsten. Kirsten is single and she claims the $12,000 standard deduction for 2018. Purple Company is Kirsten's only source of income. Ignoring any employment tax considerations, compute Kirsten's after-tax income for each of the following situations. Click here to access the 2018 individual tax rate schedule to use for this problem. [ https://imgur.com/a/SOIZ22u ] Assume the corporate tax rate is...
Purple Company records $200,000 in net income for 2019 before deducting any compensation or other payment to its sole owner, Kirsten. Kirsten is single and she claims the $12,200 standard deduction. Purple Company is Kirsten's only source of income. Ignoring any employment tax considerations, compute Kirsten's after-tax income for each of the following situations. Click here to access the 2019 individual tax rate schedule to use for this problem. Assume the corporate tax rate is 21%. When required, carryout intermediate...
Problem 2-23 (LO. 1) Purple Company has $200,000 in net income for 2019 before deducting any compensation or other payment to its sole owner, Kirsten Kirsten is single and she claims the $12,200 standard deduction for 2019. Purple Company is Kirsten's only source of income. Ignoring any employment tax considerations, compute Kirsten's after tax income for each of the following situations. Click here to access the 2019 individual tax rate schedule to use for this problem. Assume the corporate tax...
urple Company has $200,000 in net income for 2020 before deducting any compensation or other payment to its sole owner, Kirsten. Kirsten is single and she claims the $12,400 standard deduction for 2020. Purple Company is Kirsten's only source of income. Ignoring any employment tax considerations, compute Kirsten's after-tax income for each of the following situations. Click here to access the 2020 individual tax rate schedule to use for this problem. Assume the corporate tax rate is 21%. When required,...
urple Company has $200,000 in net income for 2020 before deducting any compensation or other payment to its sole owner, Kirsten. Kirsten is single and she claims the $12,400 standard deduction for 2020. Purple Company is Kirsten's only source of income. Ignoring any employment tax considerations, compute Kirsten's after-tax income for each of the following situations. Click here to access the 2020 individual tax rate schedule to use for this problem. Assume the corporate tax rate is 21%. When required,...
Problem 2-23 (LO. 1) Purple Company has $200,000 in net income for 2020 before deducting any compensation or other payment to its sole owner, Kirsten. Kirsten is single and she claims the $12,400 standard deduction for 2020. Purple Company is Kirsten's only source of income. Ignoring any employment tax considerations, compute Kirsten's after-tax income for each of the following situations. following situations. Click here to access the 2020 individual tax rate schedule to use for this problem. Assume the corporate...