Which of the following taxes would be deducted in determining an employee\'s net

Question

Which of the following taxes would be deducted in determining an employee's net pay? One of the main disadvantages of the corporate form is the professional management double taxation of dividends charter corporation must issue stock The charter of a corporation provides for the issuance of 100.000 shares of common stock. Assume that 45.000 shares were originally issued and 5,000 were subsequently reacquired. What is the amount of cash dividends to be paid if a 52 per share dividend is declared? $80,000 $10,000 $90.000 $100,000

Explanation / Answer

11. c. FICA Taxes

FICA is paid half by the employee and half by the company, so that is the one that is deducted (the employee's portion) from the employees gross pay.

12. b. double taxation of dividends

The corporation ends up paying taxes twice. First, when the corporation earns a profit, it pays a corporate tax rate on the profit amount. The second time the corporation pays taxes is when it pays dividends to shareholders.

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