Kristen, the president and sole shareholder of Egret Corporation, has earned a salary bonus of $30,000 for the current year....

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Kristen, the president and sole shareholder of Egret Corporation, has earned a salary bonus of $30,000 for the current year. Because of the lower tax rates on qualifying dividends, Kristen is considering substituting a dividend for the bonus.

Note the following: (1) Assume that the tax rates are 28% for Kristen and 34% for Egret Corporation and (2) If an amount is zero, enter "0".

 

a.  How much better off would Kristen be if she were paid a dividend rather than salary? If Kristen were paid a bonus, her after-tax effect would be $  .

    • 12 years ago
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