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)

a. Compute the combined tax cost for Xenon and Ms. Xie. (Ignore payroll tax.)

b. How would your computation change if Ms. Xie’s salary was $500,000 and Xenon paid no dividends?