McGraw-Hill's Taxation of Business Entities 3rd Edition by Connie Weaver, Brian Spilker, Edmund Outslay, John Robinson, Ronald Worsham, Benjamin Ayers, John Barrick

Exercise 56

For the current year, Maple Corporation, a C corporation, reports taxable income of $200,000 before paying salary to its sole shareholder Diane. Diane's marginal tax rate on ordinary income is 35 percent and 15 percent on dividend income. If Maple pays Diane a salary of $150,000 but the IRS determines that Diane's salary in excess of $80,000 is unreasonable compensation, what is the amount of the double income tax on Maple's $200,000 pre-salary income Assume Maple's tax rate is 35 percent and it distributes all after-tax earnings to Diane.