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Business, 16.03.2020 20:50 aeshaalhemri

Rover Corporation would like to transfer excess cash to its sole shareholder, Aleshia, who is also an employee. Aleshia is in the 24% tax bracket, and Rover is subject to a 21% rate. Because Aleshia's contribution to the business is substantial, Rover believes that a $73,200 bonus in the current year is reasonable compensation and should be deductible by the corporation. However, Rover is considering paying Aleshia a $73,200 dividend because the tax rate on dividends is lower than the tax rate on compensation. Answer the following questions to determine whether Rover is correct in believing that a dividend is the better choice. a. Regarding taxes, which would benefit Aleshia the most?b. Regarding taxes, which would benefit Rover Corporation the most?c. Considering the two parties together, which alternative would provide the most overall tax savings?

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Rover Corporation would like to transfer excess cash to its sole shareholder, Aleshia, who is also a...
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