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Bryan Houlberg expects his C corporation to generate a profit of $200,000. What is Bryan's after-tax cash flow from the corporation if net income after corporate tax is distributed to him as a dividend and his marginal tax rate on ordinary income is 37%?

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opudodennis

Answer:

[tex]\$ 117,937.50[/tex]

Explanation:

Corporate level tax on $200,000 is $61,250

Cash(After Corporate tax)= [tex]\$ 200,000 -\$ 61,250=\$138,750[/tex]

Individual tax on $138,750(15%)=[tex]0.15\times138750=\$ 20812.5[/tex]

Hence, net after tax cashflow :

[tex]\$ 138,750-\$20,812.5\\=\$117,937.50[/tex]

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