Principles Of Taxation For Business And Investment Planning 2020 Edition
23rd Edition
ISBN: 9781259969546
Author: Sally Jones, Shelley C. Rhoades-Catanach, Sandra R Callaghan
Publisher: McGraw-Hill Education
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Chapter 18, Problem 4AP
a.
To determine
Determine the after-tax cost of $4,300 interest payment, if C Products is a corporate taxpayer with a 21% marginal tax rate.
b.
To determine
Determine the after-tax cost of $4,300 interest payment, if C Products is a sole proprietorship with a 37% marginal tax rate.
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May Yaman is engaged in a VAT-business and a non-VAT business. Her records show the following data, no tax included, for the taxable year:
Sales
From VAT business
P6,000,000
From non-VAT business
4,000,000
Purchases
For VAT business from VAT suppliers
3,000,000
For non-VAT business
2,000,000
Purchases from VAT suppliers of supplies used for VAT and non-VAT business
30,000
Expenses incurred for both VAT and non-VAT business (70% of these expenses were paid to VAT-registered enterprises)
100,000
The VAT payable is:
Group of answer choices
1) In the current year, Azure Company has $350,000 of net operating income before deducting any compensation or other payment to its sole owner, Sasha. In addition, Azure has interest on municipal bonds of $25,000. Sasha has significant income from other sources and is in the 37% marginal tax bracket. Based on this information, determine the income tax consequences to Azure Company and to Sasha during the year for each of the following independent situations.(Ignore the deduction for qualified business income and the 3.8% Medicare surtax on net investment income.)
Azure is a C corporation and pays no dividends or salary to Sasha.
Azure is a C corporation and distributes $75,000 of dividends to Sasha.
Azure is a C corporation and pays $75,000 of salary to Sasha.
Azure is a sole proprietorship, and Sasha withdraws $0.
Azure is a sole proprietorship, and Sasha withdraws $75,000
Collin Products received notice of a $29,800 income tax deficiency plus $6,500 interest. The deficiency related to an incorrect method of accounting for business inventory.
Required:
Compute the after-tax cost of the $6,500 interest payment assuming that Collin Products is a corporate taxpayer with a 21 percent marginal tax rate.
Compute the after-tax cost of the $6,500 interest payment assuming that Collin Products is a sole proprietorship owned by Leslie Collin. Leslie’s marginal tax rate is 37 percent.
Chapter 18 Solutions
Principles Of Taxation For Business And Investment Planning 2020 Edition
Ch. 18 - Prob. 1QPDCh. 18 - Prob. 2QPDCh. 18 - Prob. 3QPDCh. 18 - Prob. 4QPDCh. 18 - Prob. 5QPDCh. 18 - Prob. 6QPDCh. 18 - Prob. 7QPDCh. 18 - Prob. 8QPDCh. 18 - Prob. 9QPDCh. 18 - Prob. 10QPD
Ch. 18 - Prob. 11QPDCh. 18 - Prob. 12QPDCh. 18 - Prob. 13QPDCh. 18 - Prob. 14QPDCh. 18 - Prob. 1APCh. 18 - Prob. 2APCh. 18 - Prob. 3APCh. 18 - Prob. 4APCh. 18 - Prob. 5APCh. 18 - Prob. 6APCh. 18 - Prob. 7APCh. 18 - Prob. 8APCh. 18 - Prob. 9APCh. 18 - Prob. 10APCh. 18 - Prob. 11APCh. 18 - Prob. 12APCh. 18 - A revenue agent determined that Ms. Owen underpaid...Ch. 18 - Prob. 14APCh. 18 - Prob. 15APCh. 18 - Prob. 16APCh. 18 - Prob. 17APCh. 18 - Prob. 18APCh. 18 - Prob. 19APCh. 18 - Prob. 20APCh. 18 - Prob. 22APCh. 18 - Prob. 8IRPCh. 18 - Prob. 9IRPCh. 18 - Prob. 1RPCh. 18 - Prob. 2RPCh. 18 - Prob. 1TPCCh. 18 - Prob. 2TPC
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- In the current year, Azure Company has $350,000 of net operating income before deducting any compensation or other payment to its sole owner, Sasha. In addition, Azure has interest on municipal bonds of $25,000. Sasha has signifi- cant income from other sources and is in the 37% marginal tax bracket. Based on this information, determine the income tax consequences to Azure Company and to Sasha during the year for each of the following independent situations. (Ignore the deduction for qualified business income and the 3.8% Medicare surtax on net investment income.) 3. Azure is a sole proprietorship, and Sasha withdraws $0. 4. Azure is a sole proprietorship, and Sasha withdraws $75,000.arrow_forwardMr. John Wick operates books stores and renders services as a professional broker. In2018, his gross sales amounted to P800,000. In addition to that, he received P300,000from his services as a broker. Assume that he failed to signify his intention to be taxed at8% income tax rate on gross sales in his initial Quarterly Income Tax Return, and heincurred the cost of sales and operating expenses amounting to P600,000 and P200,000,respectively. What is the income tax due to John Wick in his quarterly income tax?arrow_forwardKagura is a resident citizen, earning purely business income for the taxable year: Gross sales P2,800,000 Cost of sales 1,200,000 Operating expenses 650,000 The business is not vat-registered. 1. Determine the business tax due under Section 116 Train law-3% percentage tax 12%VAT)? 2. Determine the income tax due.arrow_forward
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