Dat, whose marginal tax rate on additional earnings is 35 percent on ordinary income and 15 percent on dividends, is the sole owner of the stock in Premton Corporation.The corporation earned $1.2 million for calendar year 2020 before these items: Salary to Sunny ($20,000 monthly) Salary to Dat ($15,000 monthly) $180,000 Tax preferred benefits to Sunny (Medical, etc.)Tax preferred benefits to Dat (Medical, etc.)$70,000. The corporate tax rate is a flat 21 percent.

1. Write a short memo to Sunny explaining the tax advantages/disadvantages of the salary and benefits and whether Dat should considering increasing or decreasing the salary and/or the fringe benefits.

2. How is any change in these amounts the result of shifting tax consequences? Explain.