.1. Jay owns 100% of Kaye Company. In 2011, Kaye Company recognizes a long-term capital gain (LTCG) of $100,000. Kaye Company has no other income or loss. Assume that Jay (an individual) is in the 39.6% tax bracket and has no recognized capital gains or losses in 2011. How much tax will Kaye Company owe on the $100,000 LTCG assuming that Kaye is a corporation?
2. Jay owns 100% of Kaye Company. In 2011, Kaye Company recognizes a long-term capital gain (LTCG) of $100,000. Kaye Company has no other income or loss. Assume that Jay (an individual) is in the 39.6% tax bracket and has no recognized capital gains or losses in 2011. How much tax will Kaye Company owe on the $100,000 LTCG if Kaye Company is a sole proprietorship?
3. Jay owns 100% of Kaye Company. Jay (an individual) is in the 39.6% tax bracket. Assume that Kaye Company is a corporation and distributes $50,000 cash to Jay as a dividend. How much tax must Jay pay on this $50,000 dividend?
4. Jay owns 100% of Kaye Company. Jay (an individual) is in the 39.6% tax bracket. Assume that Kaye Company is a sole proprietorship and distributes $50,000 of cash to Jay. How much tax must Jay pay on this $50,000 distribution?
5. Briefly describe the concept of double taxation. Particularly explain how corporations are subject to double taxation while a sole proprietorship is not subject to double taxation.