Interest versus dividend income-During the year just? ended, Shering? Distributors, Inc., had pretax earnings from operations of $493,000. In? addition, during the year it received $30,000 in income from interest on bonds it held in Zig Manufacturing and received $30,000 in income from dividends on its 5% common stock holding in Tank? Industries, Inc. Shering is in the 34% tax bracket and is eligible for a 70% dividend exclusion on its Tank Industries stock.
a. Calculate the? firm's tax on its operating earnings only.
b. Find the tax and the? after-tax amount attributable to the interest income from Zig Manufacturing bonds.
c. Find the tax and the? after-tax amount attributable to the dividend income from the Tank? Industries, Inc., common stock.
d.? Compare, contrast, and discuss the? after-tax amounts resulting from the interest income and dividend income calculated in parts b. and c.
e. What is the? firm's total tax liability for the? year?
a. The tax on operating earnings is