Mr. Lion, who is in the 37 percent tax bracket, is the sole shareholder of Toto,Inc.,...

Mr. Lion, who is in the 37 percent tax bracket, is the sole shareholder of Toto,Inc., which manufactures greeting cards. Toto’s average annual net profit (before deduction of Mr. Lion’s salary) is $290,000. For each of the following cases, compute the income tax burden on this profit. (Ignore any payroll tax consequences.)

A) Mr. Lion’s salary is $100,000, and Toto pays no dividends.

B)Mr. Lion’s salary is $100,000, and Toto distributes its after-tax income as a dividend.

C) Toto is an S corporation. Mr. Lion’s salary is $100,000, and Toto makes no cash distributions. Assume Toto's ordinary income qualifies for the 20 percent Section 199A deduction.

D) Toto is an S corporation. Mr. Lion draws no salary, and Toto makes no cash distributions. Assume Toto's ordinary income qualifies for the 20 percent Section 199A deduction.

E)Toto is an S corporation. Mr. Lion draws no salary, and Toto makes cash distributions of all its income to Mr. Lion. Assume Toto's ordinary income qualifies for the 20 percent Section 199A deduction.

Expert Solution

ekkarill92 answered 1 year ago

Mr. Lion, who is in the 37 percent tax bracket, is the sole shareholder of Toto,Inc.,...

Mr. Lion, who is in the 37 percent tax bracket, is the sole shareholder of Toto,Inc., which manufactures greeting cards. Toto’s average annual net profit (before deduction of Mr. Lion’s salary) is $360,000. For each of the following cases, compute the income tax burden on this profit. (Ignore any payroll tax consequences.) a. Mr. Lion’s salary is $100,000, and Toto pays no dividends. b. Mr. Lion’s salary is $100,000, and Toto distributes its after-tax income as a dividend. c. Toto...

Mr. Lion, who is in the 37 percent tax bracket, is the sole shareholder of Toto,Inc.,...

Mr. Lion, who is in the 37 percent tax bracket, is the sole shareholder of Toto,Inc., which manufactures greeting cards. Toto’s average annual net profit (before deduction of Mr. Lion’s salary) is $200,000. For each of the following cases, compute the income tax burden on this profit. (Ignore any payroll tax consequences.) a. Mr. Lion’s salary is $100,000, and Toto pays no dividends. b. Mr. Lion’s salary is $100,000, and Toto distributes its after-tax income as a dividend. Toto is...

Ms. Xie, who is in the 37 percent tax bracket, is the sole shareholder and president...

Ms. Xie, who is in the 37 percent tax bracket, is the sole shareholder and president of Xenon. The corporation’s financial records show the following: Gross income from sales of goods $ 1,590,000 Operating expenses (930,000 ) Salary paid to Ms. Xie (300,000 ) Dividend distributions (200,000 ) Compute the combined tax cost for Xenon and Ms. Xie. (Ignore payroll tax.) How would your computation change if Ms. Xie’s salary was $500,000 and Xenon paid no dividends?

Charlie, who is in the 37 percent marginal tax bracket, is the president and sole owner...

Charlie, who is in the 37 percent marginal tax bracket, is the president and sole owner of Charlie Corporation (a C corporation in the 21 percent tax bracket). His current salary is $700,000 per year. Whar are the income and FICA tax consequences if the IRS determines that $200,000 of his salary is unreasonable compensation?

Chris and Donna are in the 37% tax bracket for ordinary income and the 20% bracket...

Chris and Donna are in the 37% tax bracket for ordinary income and the 20% bracket for capital gains (ignore the 3.8% additional tax on investment income for higher-income taxpayers.) They have owned several blocks of stock for many years. They are considering the sale of two blocks of stock. The sale of one block would produce a gain of $11,000. The sale of the other would produce a loss of $18,000. For purposes of this problem, ignore any restrictions...

Jonathan is the sole shareholder of Furry Lion Stores, a company which owns five stores in...

Jonathan is the sole shareholder of Furry Lion Stores, a company which owns five stores in the west of England. The stores sell mainly food and groceries. Each store is run by a full time manager and three or four part-time assistants. Jonathan spends on average half a day week at each store, and spends the rest of his time at home, dealing with his other business interests. All sales are cash and recorded on till rolls which the manager...

Jonathan is the sole shareholder of Furry Lion Stores, a company which owns five stores in...

Jonathan is the sole shareholder of Furry Lion Stores, a company which owns five stores in the west of England. The stores sell mainly food and groceries. Each store is run by a full time manager and three or four part-time assistants. Jonathan spends on average half a day week at each store, and spends the rest of his time at home, dealing with his other business interests. All sales are cash and recorded on till rolls which the manager...

Nittany Company pays its sole shareholder, Tammy Lion, a salary of $109,800. At the end of...

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....

Tawana owns and operates a sole proprietorship and has a 37 percent marginal tax rate. She...

Tawana owns and operates a sole proprietorship and has a 37 percent marginal tax rate. She provides her son, Jonathon, $11,000 a year for college expenses. Jonathon works as a pizza delivery person every fall and has a marginal tax rate of 15 percent. What could Tawana do to reduce her family tax burden? Employ her son in her sole proprietorship Ask Jonathon to find a new job Start a new enterprise b. How much pretax income does...

ACC312 Federal Taxation Mrs. Franklin, who is in the 39.6 percent tax bracket, owns a residential...

ACC312 Federal Taxation Mrs. Franklin, who is in the 39.6 percent tax bracket, owns a residential apartment building that generates $80,000 annual taxable income. She plans to create a family partnership by giving each of her two children a 20 percent equity interest in the building. (She will retain a 60 percent interest.) Mrs Franklin will manage the building, and value of her services is $15,000 per year. If Mrs. Franklin's children are in the 15 percent tax bracket, compute...

Question

Mr. Lion, who is in the 37 percent tax bracket, is the sole shareholder of Toto,Inc.,...

Solutions

Expert Solution

Related Solutions

Mr. Lion, who is in the 37 percent tax bracket, is the sole shareholder of Toto,Inc.,...

Mr. Lion, who is in the 37 percent tax bracket, is the sole shareholder of Toto,Inc.,...

Ms. Xie, who is in the 37 percent tax bracket, is the sole shareholder and president...

Charlie, who is in the 37 percent marginal tax bracket, is the president and sole owner...

Chris and Donna are in the 37% tax bracket for ordinary income and the 20% bracket...

Jonathan is the sole shareholder of Furry Lion Stores, a company which owns five stores in...

Jonathan is the sole shareholder of Furry Lion Stores, a company which owns five stores in...

Nittany Company pays its sole shareholder, Tammy Lion, a salary of $109,800. At the end of...

Tawana owns and operates a sole proprietorship and has a 37 percent marginal tax rate. She...

ACC312 Federal Taxation Mrs. Franklin, who is in the 39.6 percent tax bracket, owns a residential...