Essay
Beige Company has approximately $400,000 in net income in 2008 before deducting any compensation or other payment to its sole owner,Janet (who is single).Assume that Janet is in the 35% marginal tax bracket.Discuss the tax aspects of each of the following arrangements:
a.Janet operates Beige Company as a proprietorship.
b.Janet incorporates Beige Company and pays herself a salary of $100,000 and no dividend.
c.Janet incorporates the company and pays herself a $100,000 salary and a dividend of $199,750 ($300,000 - $100,250 corporate income tax).
d.Janet incorporates the company and pays herself a salary of $400,000.
Correct Answer:
Verified
Correct Answer:
Verified
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