Tank Industries, Inc. Sheering is in the 40% tax bracket and is eligible for a 70% dividend exclusion on its Tank Industries stock.
Calculate the firm's tax on its operating earnings only. Find the tax and the after-tax amount attributable to the interest income from Zig Manufacturing bonds.
Find the tax and the after-tax amount attributable to the dividend income from the Tank Industries, Inc., common stock.
Compare, contrast, and discuss the after-tax amounts resulting from the interest income and dividend income calculated in parts b and c.
What is the firm's total tax liability for the year?
Interest versus dividend expense Michaels Corporation expects earnings before interest and taxes to be $50,000 for the current period.
Assuming an ordinary tax rate of 35%, compute the firm's earnings after taxes and earnings available for common stockholders (earnings after taxes and preferred stock dividends, if any) under the following conditions:
The firm pays $12,000 in interest. The firm pays $12,000 in preferred stock dividends. Capital gains taxes Perkins Manufacturing is considering the sale of two no depreciable assets, X and Y.
Asset X was purchased for $2,000 and will be sold today for $2 250. Asset Y was purchased for $30,000 and will be sold today for $35,000. The firm is subject to a 40% tax rate on capital gains.