the CEO of a corporation, business and finance homework help

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Scenario:
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.

A. 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.
B. 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.

Should Bob consider paying a large year-end bonus to each employee instead of
declaring dividends? Why or why not? Is there a tax issue that Bob needs to
consider when loaning the corporate plane to stockholders for vacations? What
actions can Bob take to minimize corporate tax while also providing rewards for
stockholders?

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