Rover Corporation would like to transfer excess cash to its sole
shareholder, Aleshia, who is also an employee. Aleshia is in the
24% tax bracket, and Rover is subject to a 21% rate. Because
Aleshia's contribution to the business is substantial, Rover
believes that a $135,600 bonus in the current year is reasonable
compensation and should be deductible by the corporation. However,
Rover is considering paying Aleshia a $135,600 dividend because the
tax rate on dividends is lower than the...