Essay
Blue, Inc., records taxable income before salary payments of $700,000 to its president who has a marginal rate of
32%.
a. Calculate the tax liability to Blue if the president's salary is $400,000 and if it is $100,000.
b. What tax benefit is there of paying the higher salary to the president?
c. What negative tax result may occur associated with the payment of the higher salary?
Correct Answer:
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Correct Answer:
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b. The salary is included in the gro...View Answer
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