q8

everything needed to answer the question is here.

Learning Objectives: - 9-4 Explain tax and nontax considerations in choosing a passthrough entity form - 9-6 Explain why individuals once again can use corporations as tax shelters Mr. Lion, who is in the 37 percent tax bracket, is the sole shareholder of Toto inc., which manufactures greeting cards Toto's average annual net profit (before deduction of Mc Lion's salary) is $230,000. For each of the following cases, compute the income tax burden on this profit. Assume that all dividends are taxed to individuals at a 20% tax rate. (Ignore any payroll tax consequences) Required: a. Toto is a C Corporation subject to a 21%6 tax rate. Mr. Lion's salary is $100,000, and Toto pays no dividends. b. Toto is a C Corporation subject to a 21% tax rate. Mr. Lion's salary is $100,000, and Toto distributes its after-tax income as a dividend c. Toto is an S corporation. Mr. Lion's salary is $100,000, and Toto makes no cash distributions. Assume Toto's ordinary income qualifies for the 20 percent QBI deduction, subject to no limitations d. Toto is an S corporation Mr. Lion draws no salary, and Toto makes no cash distributions. Assume Toto's ordinary income qualifies for the 20 percent QBI deduction, subject to no limitations e. Toto is an S corporation. Mr. Lion draws no salary, and Toto makes cash distributions of all its income to Mc. Lion. Assume Toto's ordinary income qualfies for the 20 percent QBi deduction, subject to no limitations Mr. Lion, who is in the 37 percent tax bracket, is the sole sharehoider of Toto inc, which manufactures greeting cards. Toto's average annual net profit (before deduction of Mr. Lion's salary) is $230,000. For each of the following cases, compute the income tax burden on this profit. Assume that all dividends are taxed to individuals at a 20% tax rate. (lgnore any payroll tax consequences) Required: a. Toto is a C Corporation subject to a 21% tax rate. Mr. Lon's salary is $100,000, and Toto pays no dividends b. Toto is a C Corporation subject to a 2126 tax rate. Mr Lion's salary is $100,000, and Toto distributes its after-tax income as a dividend c. Toto is an S corporation. Mr. Lion's salary is $100,000, and Toto makes no cash distributions Assume Toto's ordinary income quolifies for the 20 percent QB1 deduction, subject to no limitations. d. Toto is an 5 corporation. Mr. Lion draws no salory. and Toto makes no cash distributions. Assume Toto's ordinary income qualifies for the 20 percent QB1 deduction, subject to no limitations e. Toto is an S corporation. Mr Lion draws no salary, and Toto makes cash distributions of all its income to Mr Lion Assume Toto's ordinary income qualifies for the 20 percent QBi deduction, subject to no limitations