Business, 02.06.2021 21:10 sabianj0

Your client, Bob, is the CEO of a corporation that has 12 stockholders who are also the only employees of the business. The corporation operates a boat dealership in Sherman, Texas. The corporation has accumulated earnings and profits of $3,000,000, not including the current year’s taxable income, which is expected to be $800,000. No dividends have been paid to stockholders. Bob has been very pleased with the corporation’s performance and he wants to reward the stockholders. Bob is considering paying cash dividends of $10,000 per share or giving each employee a new boat that costs $10,000 and retails for $15,000. In addition, when talking with Bob, you found that he has a corporate plane that he regularly uses for vacation and that he allows other corporate officers to use for vacation.1. Why should Bob declare a cash dividend over giving stockholders a bonus?2. Why should Bob not consider paying a larger year-end bonus to his employee/stockholders’

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Your client, Bob, is the CEO of a corporation that has 12 stockholders who are also the only employe...

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