Question One
Profits and earnings on dividends recognized on company distributions represent the upper limit. Also, they represent the corporations’ ability to meet the expectations of the shareholders with regard to dividend payments without necessarily having to impair capital. The source of the dividend is arrived at by making some net adjustments in the taxable net income. Some non-deductible items are added back such as penalties, capital loss, related party losses and fines among others. Taxability of the company’s distributions depends on how accumulated and current earnings and profits are allocated to the distributions during the year. Distributions are usually made from the total profits of the current year and then the accumulated earnings and profits are considered.
Question 2
For the purposes of taxation, dividends are categorized as non-qualified and qualified. Non-qualified dividends are usually taxed using the same rates as those of ordinary income. Qualified dividends, on the other hand, are tax-free. This is only for those individuals within the taxable income brackets of 10% and 15%. Then, the next bracket of 25% to 39%, the individuals are taxed at the rate of 15%. Consequently, those within the taxable income bracket that exceeds 39.6% are taxed at the rate of 20%. Finally, it is notable that capital gains ought to be treated differently for tax on dividends.
Delegate your assignment to our experts and they will do the rest.
Question 3
Apple Inc. usually pays dividends to its shareholders a month and a half after closing the fiscal quarter. For example, in 2012, the company declared its dividend plan. The announcement also included an increase of the dividends to 52 cents per share from 47 per share. This announcement was after a stock split that converted dividends to 47 cents per share from $ 3.29. According to Apple's Fiscal Q2 2015, Apple has since the stock split repurchased $17 billion of the corporation’s stock during the September quarter, $5 billion in open markets in the December quarter, and $7 billion in March quarter. In the year 2015, the shares went up by 16.51% as compared to that of Google’s which was 2.79% gain in the in the class of shares known as nonvoting GOOG C. Unlike Apple, Google split its share into classes of two and gave shareholders one of each. This dividend dilution, in turn, stripped the shareholders of half their rights to vote.
