Calculate the Tax Disadvantage to Organizing a U

question 17

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 $200,000.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) $17,500
• B) $19,500
• C) $20,000
• D) $22,250

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Definitions:

Settling Down

The process of adopting a more stable and less erratic lifestyle, often associated with making long-term commitments in personal and professional domains.

Awakened

Refers to the state of being roused from sleep or gaining consciousness, or metaphorically, becoming aware of social or personal issues.

Threatened

A state or condition in which an individual feels at risk of harm or danger.

Intense Anxiety

A heightened state of excessive fear or apprehension, often with physical symptoms, that can significantly impair daily functioning.