1.International Pulp, a Swiss-based paper company, has annual pretax earnings (in Swiss francs) of SF 600. The corporate tax rate on retained earnings is 55%, and the corporate tax rate that applies to earnings paid out as dividends is 30%. Furthermore, International Pulp pays out 30% of its earnings as dividends, and the individual tax rate that applies to dividends is 40%. What is the effective tax rate on corporate earnings paid out as dividends? A) 48%. B) 55%. C) 58%. D) 70%. Click for Answer and Explanation C) This is an example of a split-rate corporate tax system. The calculation of the effective tax rate on a Swiss franc of corporate income distributed as dividends is based on the corporate tax rate for distributed income.
The effective tax rate on income distributed as dividends = 30% + [(1 – 30%) × 40%] = 58%. 2.David Drakar and Leslie O’Rourke both own 100 shares of stock in a German corporation that makes | 
发表于 2008-4-19 18:41
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