Question

You own 1000 shares of Mountain Oil that owns oil and gas assets. The corporation earns $5 per share before taxes. Once it has paid taxes, it will distribute its earnings to you as a dividend. You have also made capital gains of $5000 this year on your shares held. The corporate tax rate is 48%, the effective personal dividend tax rate is 30% and the personal tax rate on income is 42%. How much do you own in taxes for both capital gains and dividend income?

The answer should be $1770 I wanna process please

Answer 1

This calculation is made considering 1000 shares that we own	in $
Earning per share before taxes	5
No.of shares held	1000
Total earnings before taxes	5000
Less: Corporate tax @48%	2400
Total earnings after taxes	2600
Therefore we will receive $2600 from the company as dividend
Income statement	in $
Dividend	2600
Capital gains on shares held	5000
Total income	7600
Less: taxes @ 30% for dividend	780
Less: taxes @ 42% for capital gains	2100
Income after taxes	4720
Total taxes to be paid should be	2880

In case of absence of other information I have not considered standard deduction