Nittany Company pays its sole shareholder, Tammy Lion, a salary
of $109,800. At the end of each year, the company pays Tammy a
"bonus" equal to the difference between the corporation’s taxable
income for the year (before the bonus) and $68,500. In this way,
the company hopes to keep its taxable income at amounts that are
taxed at either 15 percent or 25 percent. This year, Nittany
reported pre-bonus taxable income of $738,500 and paid Tammy a
bonus of $670,000....