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Homework $10/12$

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Item $12$

Problem $12-11($Algo$)[$LO $12-4,12-6]$

Mr$.$ Lion, who is in the $37$ percent tax bracket, is the sole shareholder of Toto Incorporated, which manufactures greeting cards. Toto$$s average annual net profit $($before deduction of Mr$.$ Lion$$s salary$)$ is $$420,000.$ For each of the following cases, compute the income tax burden on this profit. $($Ignore any payroll tax consequences.$)$

Required:

Mr$.$ Lion$$s salary is $$100,000,$ and Toto pays no dividends.

Mr$.$ Lion$$s salary is $$100,000,$ and Toto distributes its after$-$tax income as a dividend.

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.

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.

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.