Helly holds a 100-percent stake in Macro Data Incorporated (MDI), an S corporation operating a qualified trade or business. In the current year, MDI reports $20,000 of ordinary business income (before deducting any wages paid to Helly). Helly can exert influence over the amount of wages she is paid by MDI and although she recognizes that MDI can only deduct a reasonable wage, she is considering some extreme alternatives to judge the possible effects. Determine the following items below, considering Helly could pay herself wages of $1,000 versus wages of $20,000

Answer rating: 100% (QA)

Impact of Different Wage Amounts on Helly and MDI Scenario 1 Wages of 1000 MDI Taxable Income 20000 ... View the full answer