RSM424H1 Lecture Notes - Lecture 12: Real Estate Owned, Accounts Receivable, Issued Shares
Document Summary
Corporate capitalization debt or equity: organization, capital structures, and income distributions of corporations. Corporate capitalization debt or equity: ha(cid:396)eholde(cid:396)"s pe(cid:396)spe(cid:272)tive, Debt and equity are capital property for tax purposes, and. Yield a return on investment in the form of interest or dividends: debt and equity are subject to capital gains treatment, capitalizing of a corporation by shares and debt: Losses when shares or loans are disposed of, and. Shareholder loans may bear some rate of interest or be interest-free. Interest paid by the corporation is deductible for tax purposes: corporate capitalization by shareholder debt - an example. Corp x is subject to tax of 27% and earns business income of ,000 before the payment of i(cid:374)te(cid:396)est. Ha(cid:396)eholde(cid:396) loa(cid:374) of (cid:1004),(cid:1004)(cid:1004)(cid:1004) (cid:272)a(cid:374) have (cid:1005)(cid:1004)% i(cid:374)te(cid:396)est o(cid:396) (cid:374)o(cid:374)e. ha(cid:396)eholde(cid:396)"s pe(cid:396)so(cid:374)al income tax rate is 50%. What is the combined tax rate with and without paying interest on the shareholder loan: corporate capitalization by shareholder debt an example.
