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Discussion Question $3-19($LO$.5)$

Omar, an individual in the $37\%$ tax bracket, wants to shift some of his income to a new corporation in order to take advantage of the $21\%$ corporate tax rate. Omar plans to avoid any tax on dividends by retaining all earnings within the corporation. Will Omar's plan work?

Omar's ability to achieve tax savings by shifting income to a corporation may be limited by $.$ Omar could be subject to a $\%$ penalty tax on $$ the corporation.

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