Mr.Longwood and Mrs.Kennett are the equal shareholders in LK Corporation.Both shareholders have a 37 percent marginal tax rate on ordinary income.LK's financial records show the following:
a.Compute the combined tax cost for LK,Mr.Longwood,and Mrs.Kennett attributable to LK's operations.
b.How would your computation change if the interest on the shareholder debt was $175,000 and LK paid no dividends?
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