Question: sara whose marginal tax rate on additional earnings is 35 percent on ordinary income and 15 percent on dividends, is the sole owner of the

sara

whose marginal tax rate on additional earnings is 35 percent on ordinary income and 15 percent on dividends, is the sole owner of the stock in

Premton Corporation. The corporation earned $1.2 million for calendar year 2020 before these items:

Salary to Sara ($15,000 monthly)

$180,000

Tax preferred benefits to Sara (Medical, etc.)

$70,000

The corporate tax rate is a flat 21 percent.

Write a short memo to Sara explaining the tax advantages/disadvantages of the salary and benefits and whether Sara should considering increasing or decreasing

the salary and/or the fringe benefits.

How is any change in these amounts the result of shifting tax consequences? Explain.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!

Bruce Ibach owns Biotech Fitness Centre, which showed the following selected transactions for the month ended May 31, 2020: Required Prepare journal entries for each of the above transactions....

Question 5 Sunny, whose marginal tax rate on additional earnings is 35 percent on ordinary income and 15 percent on dividends, is the sole owner of the stock in Szafranski Corporation. The...

John, whose marginal tax rate on additional earnings is 35% percent on ordinary income and 15% percent on dividends, is the sole owner of the stock in Premton Corporation. The corporation earned $1.2...

Matt, whose marginal tax rate on additional earnings is 35 percent on ordinary income and 15 percent on dividends, is the sole owner of the stock in Premton Corporation. The corporation earned $1.2...

Dat, whose marginal tax rate on additional earnings is 35 percent on ordinary income and 15 percent on dividends, is the sole owner of the stock in Premton Corporation.The corporation earned $1.2...

Sunny, whose marginal tax rate on additional earnings is 35 percent on ordinary income and 15 percent on dividends, is the sole owner of the stock in Szafranski Corporation. The corporation earned $1...

Question No 1 You are the chief accountant for a company Shahwaiz Enterprise. You assistant has prepared an income statement for the current year and has also developed the following additional...

APBD. Leona, whose marginal tax rate on ordinarv income is 3?.5 percent. owns 1m percent of the stock of Henlealr Corporation. This vear. Henlev generates $1 million of taxable income. a. If Henley:r...

Leona, whose marginal tax rate on ordinary income is 37 percent and special rate on qualified dividends is 20 percent, owns 100 percent of the stock of Henley Corporation. This year, Henley generates...

Adam borrowed an amount of x today, and he plans to repay the loan with a payment of $1,000 at the end of 3 years and $2,000 at the end of 5 years. If his loan has an annual effective rate of...

Identify and discuss the key steps in the closing process that provide the most opportunity to make mistakes in processing account transactions. Why did you select these steps and what makes them...

Exercise. Find the indefinite integral o f t a n 2 ( x ) s e c 2 ( x ) with respect t o x . t a n 2 ( x ) s e c 2 ( x ) d x = , | + C

A certain spring has a spring constant of 250 N/m. How much force would be required to stretch it to 0.50m? Multiple choice question so options are below: a. 500 N b. 31 N c. 125 N d. 63 N

A 10.0 N force is used to move a cart from rest for a distance of 10.0m on a flat surface. Determine the final velocity of the cart if it has an 8.0kg mass. Multiple choice so possible answers are...

Our company announced that it will pay 2 TL of dividend per share today, and announced its dividends as 3 TL per share next year (1st year), 4 TL in the 2nd year and 5 TL in the 3rd year. The company...

Tori and some other childeen experimented with balls to see which ones rolled. First using a piece of cardboard to use as a ramp, they angled it on a block to the floor to test the balls. Then Tori...

How will you determine which units are not in compliance with Title III, ADA requirements?

How will you document a good-faith effort to meet Title III, ADA requirements?

Exculpatory statements (described in Chapter 5, Significant Hospitality Contracts) are often posted in recreational facilities, exercise rooms, pools, and spas. Explain their purpose and identify...