Question

Purple Company has $200,000 in net income for 2015 before deducting any compensation or other payment to its sole owner, Kirsten. Kirsten is single and has no dependents. She claims the $6,300 standard deduction, and her personal exemption is $4,000 for 2015. Purple Company is Kirsten’s only source of income. Ignoring any employment tax considerations, compute Kirsten’s after-tax income if:
a. Purple Company is a proprietorship and Kirsten withdraws $50,000 from the business during the year.
b. Purple Company is a C corporation and the corporation pays out all of its aftertax income as a dividend to Kirsten.
c. Purple Company is a C corporation and the corporation pays Kirsten a salary of $138,750.


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  • CreatedSeptember 09, 2015
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