New Business Is Just Being Formed by 10 Investors,each of Whom

question 13

Multiple Choice

New Business is just being formed by 10 investors,each of whom will own 10% of the business.The firm is expected to earn $1,000,000 before taxes each year.The corporate tax rate is 34% and the personal tax rate for the firm's investors is 35%.The firm does not need to retain any earnings,so all of its after-tax income will be paid out as dividends to its investors.The investors will have to pay personal taxes on whatever they receive.How much additional spendable income will each investor have if the business is organized as a partnership rather than as a corporation?

• A)$20,384
• B)$20,800
• C)$21,225
• D)$21,658
• E)$22,100

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Definitions:

Legal Aid

Legal aid refers to the provision of assistance to individuals who are unable to afford legal representation and access to the court system.

Contingency Fee Agreement

A contingency fee agreement is a payment structure for legal services where the client pays the attorney a percentage of the settlement or judgment amount, only if the case is won.

Code of Business Conduct

A set of guidelines designed to set out acceptable behaviors for members within an organization.

Provincial Law Society

A Provincial Law Society is an organization in Canadian provinces responsible for regulating the practice of law, ensuring professional standards and protecting the public interest.