Essay
Blue, Inc., has taxable income before salary payments to its president of $700,000 in 2014. Blue is in the 34% tax bracket, and the president is in the 35% tax bracket.
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 larger salary to the president?
c. What negative tax result may occur associated with the payment of the higher salary?
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e. $700,000??$700,000??(400,000)??(100,0...View Answer
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