A Business Generates Profits of $150,000

question 1

Multiple Choice

A business generates profits of $150,000.The owner currently has a 32% marginal tax rate.What is the total amount of taxes paid if the business is a regular corporation and $20,000 in dividends is distributed to its sold individual shareholder?

• A)Corporate tax,$31,500; individual tax,$3,000
• B)Corporate tax,$48,000; individual tax,$6,400
• C)Corporate tax,$31,500; individual tax,$6,400
• D)Corporate tax,$0; Individual tax,$48,000

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Definitions:

Trout

A common name for several species of freshwater fish belonging to the salmon family, often valued as food and game.

Reds

Refers colloquially to red wine or to teams wearing red uniforms; context could specify further meaning.

Post Hoc

Short for 'post hoc ergo propter hoc,' a logical fallacy implying that since one event followed another, it must be caused by it.

Fallacy

A logical fallacy that undermines the validity of an argument.