Interest versus dividend income During the year just ended, Shering Distributors, Inc., had pretax earnings from operations of $490,000. In addition, during the year it received $20,000 in income from interest on bonds it held in Zig Manufacturing and received $20,000 in income from dividends on its 5% common stock holding in Tank Industries, Inc. Shering is in the 40% 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?
Paper#77315 | Written in 18-Jul-2015Price : $27