Starr Jackson is an 18-year-old softball player from Tampa, Florida. She received scholarship offers from several schools and is choosing to play softball at the University of Texas. 

Starr is very active on social media and has over 100,000 followers on Instagram. For calendar year 2022 she signs agreements with a major athletic wear brand, a sunglasses company, a protein bar company, and a nationally recognized smoothie franchise. Each company will treat Starr as a contractor (not an employee). She agrees to post 15 photos throughout the year advertising the athletic brand, and in exchange she receives clothing with a fair market value (FMV) of $7,500. She agrees to post five photos throughout the year wearing shades from the sunglasses company, and she is paid $250 for each post. The company also provides her with two pairs of its sunglasses (FMV of $300 total). The protein bar company asks Starr to post 10 times throughout the year to advertise their product, and they agree to pay Starr $1,000 per post. Additionally, Starr agrees to post five times with a smoothie from the smoothie company, and she is paid $750 for each post. Finally, Starr accepted a sponsorship from Shyatt Hotels with $500,000 in yearly earnings in exchange for promoting their brand on social media. Starr decides that in order to increase her influence, she should purchase a new cell phone ($1,000), an editing app ($50/year) and a light ($300). 

Required: If Starr incorporates (whether C corporation or S corporation), she plans to pay herself a salary equal to 40 percent of her gross income or ordinary business income. Please advise Starr under the following scenarios:

1. Starr doesn't plan to make withdrawals from her business for many years, possibly leaving the funds for retirement.
2. Starr plans to use the funds earned to pay for miscellaneous expenses at school.

Answer rating: 100% (QA)

Starr Jackson an 18yearold softball player from Tampa Florida who has received scholarship offers fr... View the full answer