Calculate the Tax Disadvantage to Organizing a U

question 13

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 $1,500,000.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) $146,250
• B) $152,250
• C) $166,850
• D) $170,375

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Definitions:

Money Supply

The aggregate sum of funds present in an economy at a given moment, encompassing cash, coins, and the amounts maintained in checking and savings accounts.

Price Level

A measure of the average prices of goods and services in an economy at a specific point in time, often tracked to assess inflation or deflation.

Aggregate-Demand Curve

A line depicting the overall demand for every product and service within an economy across different price points.

Exchange Rate

The value of one currency for the purpose of conversion to another, determining the amount of one currency that can be exchanged for a unit of another currency.