Question

It is 2018. The company you founded called Mineral Gells had earnings before tax of $100,000,000 this year (congratulations!). You are the company’s sole owner. The corporate tax rate is 21%, you are in the 37% marginal bracket, and your dividends are taxed at 20%.

Mineral Gells is an S-corporation and does a 50% distribution of income. The new tax code allows you to exclude 20% of your business income from taxation; this means you pay taxes only on 80% of the business income. How much do you personally have to pay in taxes, and what is your after-tax dividend? How would this change if you were not allowed the 20% exclusion?

What additional information do you need?

Answer 1

Answers Ans According to the given data S-corporation i mineral Gells] i to ou foron 21. The earnings = 100000000 (before tax) the corporate tax . 70000 stou 50'7. The payo ut The dividend tax = The corporate tax before a 21000000 Garves @10000 0 00 02 21% . 20% After tax earnings 2 79000 ooo @ 100000000 - 21000000 Dividend = 7900000 0 X 50% 395ooooo

a) Personal tax payment = 3950000 x 200% е тҹоо ооо е ) 0.? tee tax locope - 393 00 000 - 1400 000 О о ООО,