Calculate the Tax Disadvantage to Organizing a U

question 61

Multiple Choice

Calculate the tax disadvantage to organizing a U.S.business today,after passage of the Jobs and Growth Tax Reconciliation Act of 2003,as a corporation versus a partnership,given the following assumptions.All earnings will be paid out as dividends,and operating income before taxes will be $750,000.The effective corporate tax rate is 35%,and the tax rate on corporate dividends is 15%.The average personal tax rate for partners in the business is 35%.

• A) $63,125
• B) $64,250
• C) $66,000
• D) $73,125

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Definitions:

Seminiferous Tubules

Narrow, coiled tubules within the testes where spermatogenesis, the production of sperm cells, occurs.

Spermatozoa

Male reproductive cells, or sperm, responsible for fertilizing the female ovum.

Cryptorchidism

A condition where one or both of the testes fail to descend from the abdomen into the scrotum in male infants.

Balanitis

Inflammation of the head (glans) of the penis, often due to infection.