Ms. Xie, who is in the 37 percent tax bracket, is the sole shareholder and president of
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Question:
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 | $ 1,602,000 |
---|---|
Operating expenses | (934,000) |
Salary paid to Ms. Xie | (304,000) |
Dividend distributions | (204,000) |
Required:
- Compute the combined tax cost for Xenon and Ms. Xie. (Ignore payroll tax.)
- How would your computation change if Ms. Xie's salary was $508,000 and Xenon paid no dividends?
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