An Individual's Only Source of Income Is Dividends from Public

question 142

Multiple Choice

An individual's only source of income is dividends from public companies.He is consid- ering transferring the public company shares to a corporation.If he was to do so, which of the following statements is correct?

• A)There would be a reduction in the total taxes paid.
• B)There would always be deferral of taxes as long as the dividend income was left in the corporation.
• C)All of the federal corporate taxes paid on the dividends would be refunded when all of the dividends received by the corporation are paid out to the individual.
• D)The individual taxes on the dividends would be lower after they have passed through the corporation.

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Definitions:

Ending Inventory

The total value of a company's merchandise, raw materials, and finished and unfinished products which have not yet been sold at the end of an accounting period.

Purchases

The act of buying goods and services, typically for the purpose of resale in the ordinary course of business.

Consignee

A person or company to whom goods are shipped for sale, who receives and sells the goods on behalf of the consignor.

Consignor

The consignor is the party that owns goods or merchandise and entrusts them to another party, known as the consignee, for the purpose of sale.