Mr$.$ and Ms$.$ Soon are the sole shareholders of SW$,$ Incorporated. For the last three years, SW has employed their child as a sales representative, paying a $$30,000$ annual salary. During a recent IRS audit, the revenue agent discovered that the child has never made a sale and spends the majority of time playing saxophone in a jazz band.

Required:

Determine the potential effect of this discovery on SW$\text{'}$s taxable income and on the Soons' taxable income under the following assumptions:

a$.$ SW$,$ Incorporated is an S corporation.

b$.$ SW$,$ Incorporated is a C corporation.

Complete this question by entering your answers in the tabs below.

Required B

Determine the potential effect of this discovery on SW$\text{'}$s taxable income and on the Soons' taxable income assuming SW$,$ Incorporated is an $S$ corporation.

$\backslash$table$[[$SW$,$ Incorporated taxable income,,Amount$],[$Mr and Mrs$.$ Soons taxable income,,$]]$

Reguired A