In the Current Year, DNS (A C Corporation) Had Taxable

question 54

Essay

In the current year, DNS (a C corporation) had taxable income of $600,000 and distributed all of its after-tax earnings to Daniel, its sole shareholder. DNS's tax rate is 38 percent. Assuming Daniels's marginal tax rate on ordinary income is 28 percent and his dividend rate is 15 percent (he is not subject to the net investment income tax), what is the overall tax rate (combined corporate level and shareholder level) on DNS's $600,000 of taxable income?

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Definitions:

Cognitive Development

The process of growth and change in intellectual/mental abilities such as thinking, reasoning, and understanding over the course of a person's life.

Sensorimotor

Pertaining to or involving both sensory and motor activities or functions, often in reference to the integration of sensory input and motor responses.

Motor Cortex

A part of the cerebral cortex tasked with planning, managing, and executing movements done by choice.

Inferior Frontal Cortex

A region of the frontal lobe of the brain that plays a role in language processing and motor control.