Question

A c corporation earns $9.50 per share before taxes. the corporate tax rate is 39%, the personal tax rate on dividends is 10%, and the personal tax rate on non-dividend income is 36%. what is the total amount of taxes paid if the company pays a $4 dividend? g

Answer 1

The total amount of taxes that the company will pay will be calculated as under -

Total taxes paid = (Taxes on income) + (Taxes on dividends)

Total taxes paid = ($ 9.50 X 39%) + ($ 4 X 10%)

Total taxes paid = $ 3.705 + $ 0.4 = $ 4.105 or $ 4.11