A business entity's taxable income before the cost of certain fringe benefits paid to owners and other employees is $400,000. The amounts paid for these fringe benefits are as follows:

The business entity is equally owned by four owners.

a. Calculate the taxable income of the business entity if the entity is a partnership, a C corporation, and an S corporation.

b. Determine the effect on the owners for each of the three business forms.

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Owners Other Employees $40,000 75,000 Group term life insurance Meals and lodging incurred for the $20,000 convenience of the employer Pension plan *H.R. 10 Keogh) plan for partnership and S corporation. 50,000 30,000 90,000