The corporation earns $3 per share before taxes. once it has paid taxes,it will distribute the rest of its earnings to you as a dividend.The corporate tax rate is 35%,and the personal tax rate on income is 20%. How much is left for you after all taxes are paid
To calculate how much is left for you after all taxes are paid, we can break it down into the following steps:
1. Calculate the amount of taxes paid by the corporation:
- The corporation earns $3 per share before taxes.
- The corporate tax rate is 35%.
- So, the taxes paid by the corporation would be 35% of $3, which is 0.35 * $3 = $1.05 per share.
2. Calculate the amount of earnings distributed to you as a dividend:
- After paying taxes, the corporation will distribute the remaining earnings to you as a dividend.
- The remaining earnings per share would be $3 - $1.05 = $1.95.
3. Calculate the personal taxes on the dividend received:
- The personal tax rate on income is 20%.
- So, the personal taxes on the dividend would be 20% of $1.95, which is 0.20 * $1.95 = $0.39 per share.
4. Calculate the final amount left for you after all taxes are paid:
- After deducting the personal taxes, the final amount left for you after all taxes are paid would be $1.95 - $0.39 = $1.56 per share.
Therefore, the final amount left for you after all taxes are paid is $1.56 per share.