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Provisions of the U.S. Tax Code for Corporations and Individuals Which source of investor income is suscestoble to double taxation? intertst eamed Dividends The applcable tax rate for 5 cerporations is bast en the? Stockholders' individual tax sates Corporte tax rate common stock autsanding, can But hamster hie a single income ter reben that reports the incomes and expenses of both componies? No, because bive Hamster Manufactunng s ownership sake in Back Sheep Breascasting is less that or equal to 40 , whereas sow or more is required by the U.S. tar Code. inere is reguired by the U.S. Tar Cede. the U.S.Tar code. and as averace tax rate ef Suppose vou want to invest $10.000. Yew have twa options: Astume that the tax rate on corporate taxoble income up to 550,000 is 15%, and 25% for income levels between 550,00t and $75,000, If the 0 umsy Chihuahua Music Company has a taxatle income of $55,000, then it has a tax liabaty of and an average tax rate of Supose veu wark to invest $10,000. You have two estions: Option a 1 Invest in munopal bonds with an expected returs of 7.00%,00 Option ezi livest is the corporate bonds of Jefferson s Necrander Inc which are effericg an expected return of 10. 15\% Nusume that your decisian is based solely on your tax sitwation. If evervising elie is the same far both bends, at what tax rate nould rou be indifferent between these two bond irvestments? 31.03% 34.13% 39,726 28.864 after is menthe. How will your gain or tows be treated when vou fie vour tanes? As a capral pan that wid be taxed at the current erdinary income tow rate As a capital gain that wit be taked at the capical gans rax rete

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