Calculate the Tax Disadvantage to Organizing a U

question 9

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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