i have decided to make it 2 pages that because the required instructions may not enough with one page. i need to see good effort because i need this extra points to pass this class.
here is the instructions.
There is a chance for improving your grade! I had a short conversation with Mr. Schroeder yesterday and he raised up a very interesting issue. Please read the following:
The IRS has established a limitation on C corporations accumulating earnings and not passing out to shareholders in the form of dividends. This avoids the second taxation to the shareholders since the earnings were already taxed when earned by the C corporation. By accumulating earnings, the shareholders’ value of the company increases and, if and when, the shares are sold, the shareholder is taxed at the capital gains rate on the accumulated earnings and not as a personal tax. Financial analysts generally refer to the Bardahl Formula to determine if earnings retention was excessive.
Any student who submits a strictly one-page document explaining this issue, will receive 5 extra points! I want to see three paragraphs. The first explains the differences between C corporations, S corporations and listed corporations. A table would be great. The second paragraph will explain the concept of double taxation and how accumulating dividends avoids double taxation. A chart would be great. The third paragraph explains the Bardahl Formula.
I know that this is final week so, another good news, you can use next week’s class time to do this assignment. It is optional, though. If you do not wish to take advantage of this, you could just use class time to study for the exam. Think about it as a review session if you like. Attendance is not mandatory.