If the Raintree Company Has Accumulated Earnings Each Year but the Directors

question 28

Multiple Choice

If The Raintree Company has accumulated earnings each year but the directors have not declared dividends for five years, the shareholders may:

• A) petition a court of law for redress.
• B) override the board by a two-thirds vote.
• C) ask for an injunction requiring a dividend to be declared.
• D) do nothing but sell their stock.

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Definitions:

Progressive Rate Structure

This is a tax system in which the tax rate increases as the taxable base amount increases, typically applied to incomes to ensure higher earners pay a greater percentage of their income.

Regressive Rate Structure

A tax system where the tax rate decreases as the taxable amount increases, placing a higher burden on lower earners relative to higher earners.

Marginal Tax Rate

The rate at which the next dollar of taxable income will be taxed, a tool used to gauge the impact of additional income or deductions on income tax.

Taxable Income

The amount of income used to calculate how much the tax will be for an individual or a corporation, after all deductions and exemptions.