Charleston Corporation (CC)now Operates as a "Regular" Corporation,but It Is

question 5

Multiple Choice

Charleston Corporation (CC) now operates as a "regular" corporation,but it is considering a switch to S Corporation status.CC is owned by 100 stockholders who each hold 1% of the stock,and each faces a personal tax rate of 35%.The firm earns $2,000,000 per year before taxes,and since it has no need for retained earnings,it pays out all of its earnings as dividends.Assume that the corporate tax rate is 34% and the personal tax rate is 35%.How much more (or less) spendable income would each stockholder have if the firm elected S Corporation status?

• A)$ 2,565
• B)$ 4,420
• C)$ 8,580
• D)$11,150
• E)$13,000

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Definitions:

Effective Goals

Objectives that are clearly defined, measurable, achievable, relevant, and time-bound, assisting in guiding motivation and measuring progress.

Measurable

Capable of being quantified or expressed as a numerical value to assess the size, amount, or degree of something.

Mass Merchandiser

Retail businesses that sell a large variety of goods to consumers at low prices, typically in large stores or online.

Wal-Mart

An American multinational retail corporation that operates a chain of hypermarkets, discount department stores, and grocery stores.