erest versus dividend income During the year just ended, Shering Distributors, $

Question

erest versus dividend income During the year just ended, Shering Distributors, $25,000 in income from interest on bonds it held in Zig Manufacturing and received the 34% tax bracket and is eligible for a 70% dvidend exclusion on its Tank Industries stock a. Calculate the firm's tax on its operating earnings only S25 000 in ncome, tom dvidends 0n its 5% common stock holding in Tark indstes, Inc. Shering is year t 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? Less. nppncate Excausion Taxable amount Tax (34%) After-tax amount 17000 33000 d. Compare, contrast, and discuss the alfter-tax amounts resulting from the interest income and dividend income calculated in parts b. and c. (Selecd all the choices that apply) The after-tax amount of dividends received, S 16,500, exceeds the after-tax amount of interest, S22450, due to the 70% corporate Shidendeason ?A. ? B. urt of interest. S 16.500, due to the 70% cop rate di der de clusion The aner tax amount of dividends received $22.450, exceeds the after-tax an bond investments bond investments C. Since the äfter-tax amount of interest exceeds the after-tax amount of dividends, this increases the attractiveness of stock investments by one corporation in another relative to ? D Since the after-tax amount of dividends exceeds the after-tax amount of interest this increases the attract eness of stock investments by one corporation in another relative to e. The total tax liability for the year is (Round to the nearest dollar) Enter any number in the edit fields and then continue to the next question

Explanation / Answer

I think they are looking answer for c part
c) dividend income:
Before tax amount=25000
Less:applicable exclusion=70%*25000=17500
Taxable amount=7500
Tax(34%)=34%*7500=2550
After tax amount=25000-2550=22450

solving part 2 now:
interets income:
Before tax amount=25000
Less:applicable exclusion=0%*25000=00
Taxable amount=25000
Tax(34%)=34%*25000=8500
After tax amount=25000-8500=16500

the after tax from dividends is higher than interest income because of 70% dividend exclusion.
It is option B and D

e)taxes on operating earnings=485000*34%=164900
=164900+8500+2550=175950

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