Which of the following is correct? 1 It would be cheaper for ABCL to own and pay for the insurance policies because the corporate earnings in a small business corporation like ABCL are sheltered from tax, therefore the funds required to pay the insurance premiums could come out of completely tax-free corporate earnings. 2 It would be cheaper for ABCL to own and pay for the insurance policies because the company can deduct the premiums paid as a business expense, while the individuals would have to pay the premiums with after-tax dollars. 3 It would be cheaper for ABCL to own and pay for the insurance policies because a portion of corporate earnings in a small business corporation like ABCL are only taxed at around the 20% marginal rate, therefore lesser pre-tax corporate earnings would be required to generate the necessary

Which of the following is correct? 1 It would be cheaper for ABCL to own and pay for the insurance policies because the corporate earnings in a small business corporation like ABCL are sheltered from tax, therefore the funds required to pay the insurance premiums could come out of completely tax-free corporate earnings. 2 It would be cheaper for ABCL to own and pay for the insurance policies because the company can deduct the premiums paid as a business expense, while the individuals would have to pay the premiums with after-tax dollars. 3 It would be cheaper for ABCL to own and pay for the insurance policies because a portion of corporate earnings in a small business corporation like ABCL are only taxed at around the 20% marginal rate, therefore lesser pre-tax corporate earnings would be required to generate the necessary

Business/Professional Ethics Directors/Executives/Acct

8th Edition

ISBN:9781337485913

Author:BROOKS

Publisher:BROOKS

Chapter6: Professional Accounting In The Public Interest

Section: Chapter Questions

Problem 34.2EC

See similar textbooks

Similar questions

Which of the following would be a good question to ask before advising a client to move from a Schedule C to S corporation tax treatment? Review Later How does moving to S corp tax treatment impact the ability to pump tons of money into a tax-deferred retirement plan? What really are the net savings, after accounting for all the extra fees attached to operating an S corporation? Is this client likely to actually do the compliance stuff associated with operating an S corporation, or is the "extra red tape" possibly (read: probably) going to become a nightmare for the client?.
Which of the following groups can benefit from the interest tax shield? both debtholders and equityholders. debtholders. equityholders. only the firm's customers.
Forming a limited liability company is one of the best ways to protect personal finances from business debts and obligations. Which of the following describes another advantage of forming an LLC? a) LLCs aren't recognized as legal entities by the government. b) LLCs allow business owners to be tax exempt. c) LLCs offer more flexibility when compared to corporations. d) LLCs pay taxes to the IRS directly, which makes filing
Individuals and firms pay out a significant portion of their income as taxes, so taxes are important in both personal and corporate decisions. Our tax system is progressive. Individual Individuals pay taxes on wages, on investment income, and on the profits of proprietorships and partnerships. Taxable income is defined as gross income less a set of deductions. In 2018, the personal exemption is for taxpayers and their dependents is zero. A capital gain (loss) is the profit (loss) from the sale of a capital asset for more (less) than its purchase price. In 2018, for most taxpayers a -Select- ✓ capital gain is taxed at a maximum rate of 15%, while a -Select- capital gain is taxed as ordinary income [for high-income taxpayers the tax rate on long-term capital gains is 20% ]. -Select- ✓income consists of dividend and interest income. Interest income (except interest on state and local government debt which is exempt from federal taxes) is taxed as -Select- while dividends are taxed at the…
Which of the following is not something that corporations can do with their profits? a. Pay income tax to the government b. They can do all of these. c. Pay them to shareholders d. Hold profits within the firm
Federal Income Tax I How does the cash basis method of accounting benefit small business owners, if at all? Under what condition would the cash method of accounting be advantageous as compared with using the accrual methods? Explain. Using your knowledge of GAAP and financial reporting, list and explain one good reason that GAAP should not be used for tax purposes and one good reason that it should be used.
Discuss the reasons why individuals generally prefer capital gains over ordinary gains. Explain why corporate taxpayers might prefer capital gains over ordinary gains.
The disadvantages are: (Select all the choices that apply.) A. Income to a corporation is subject to double taxation, once at the corporate level and again when received by the owners in the form of a dividend. B. The life of the business usually ends with the death of any of the owners. C. The corporation is more complicated and more expensive to set up than other business entities. D. Corporate liabilities can be passed on to the shareholders, thus making stock ownership primarily the realm of wealthy investors.
An S corporation avoids taxes at a. none of the choices. b. the corporate level. c. the market level. d. the shareholder level
Which of the following is an advantage of a corporation? ANSWER O O O O The earnings of a corporation are not taxed. Transfer of corporation ownership is easy. Startup costs for a corporation are less expenses than other business forms. Stockholders have unlimited liability. I DON'T KNOW YET
Corporations are not without certain disadvantages. Most corporations are taxable entities, and their income is subject to taxation. This "income tax" is problematic as it oftentimes produces double taxation. This effect occurs when shareholders receive cash dividends that they must include in their own calculation of taxable income. O True False
Whilst searching for related literatures for her thesis study, Jackie found a tax law which provides that proceeds from the collection of taxes are to be used to rehabilitate a private organization under financial stress. This clearly violates what constitutional right? a. right to just compensation b. right to due process c. right against self-incrimination d. right to equal protection of the law