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MrLongwood and Mrs

Question 93

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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:
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? 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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a.LK taxable income: $380,000 = $875,000...

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