You Are a Shareholder in a Corporation Which Has Elected

question 51

Multiple Choice

You are a shareholder in a corporation which has elected subchapter S tax treatment. The corporation announces a profit of $6 per share, of which it retains $1 for reinvestment and distributes the rest as dividend payments. Given that the personal tax rate is 35%, how much tax must you pay per share?

• A) $0
• B) $2.10
• C) $1.75
• D) $2.52

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Definitions:

Set Point

A theory suggesting that an individual's body weight, or other physiological markers, are regulated around a specific value or range by the body's homeostatic mechanisms.

Body Mass Index

A measure of body fat based on height and weight that applies to adult men and women.

Blood Glucose Level

A measurement that indicates the amount of sugar present in the blood at any given time.

Ghrelin Production

The process of producing ghrelin, a hormone that stimulates appetite, promotes fat storage, and is involved in regulating energy balance.