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A small firm had sales of \$1,000,000 in 2015. Its
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# Question : A small firm had sales of \$1,000,000 in 2015. Its : 148583

A small firm had sales of \$1,000,000 in 2015. Its cost of goods sold equaled 75% of sales, and its overhead and administrative costs were \$100,000. It had \$50,000 in depreciation expense. Assuming the firm is a C corporation, find the firm's expected Federal tax bill. Suppose the firm in part a has 1000 shares of stock outstanding. The stock is owned equally by 2 owners. What is the (after tax) earnings per share? If the firm pays out half of its earnings to its shareholders as a cash dividend, while retaining the other half for reinvestment, what additional personal tax will each shareholder owe (assume their dividends are taxed at a rate of 15%)? Now assume instead that the firm was an S corporation. Owner A is married and her spouse earned 80,000. Owner B is single and has no other income. How much gross income would each owner's household report on their personal income tax forms? Did it matter whether the firm issued half its earnings as a cash distribution, or not? (you don't need to actually calculate their tax bills)

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