Moana is a single taxpayer who operates a sole proprietorship. She expects her taxable income next year to be $250,000, of which $200,000 is attributed to her sole proprietorship. Moana is contemplating incorporating her sole proprietorship. (Use the tax rate schedule.) a. Using the single individual tax brackets and the corporate tax rate, find out how much current tax this strategy could save Moana (ignore any Social Security, Medicare, or self-employment tax issues). (Do not round your intermediate calculations. Round your final answer to two decimal places.) Current tax saved b. How much income should be left in the corporation? Income left
Moana is a single taxpayer who operates a sole proprietorship. She expects her taxable income next year to be $250,000, of which $200,000 is attributed to her sole proprietorship. Moana is contemplating incorporating her sole proprietorship. (Use the tax rate schedule.) a. Using the single individual tax brackets and the corporate tax rate, find out how much current tax this strategy could save Moana (ignore any Social Security, Medicare, or self-employment tax issues). (Do not round your intermediate calculations. Round your final answer to two decimal places.) Current tax saved b. How much income should be left in the corporation? Income left
Chapter24: Multistate Corporate Taxation
Section: Chapter Questions
Problem 26P
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![2021 Tax Rate Schedules
Individuals
Schedule X-Single
If taxable income is over:But not over:
$ 9,950
$ 40,525
$ 86,375
$ 164,925
$ 209,425
$ 523,600
The tax is:
10% of taxable income
$ 9,950
$995 plus 12% of the excess over $9,950
$ 40,525
$ 86,375
$ 164,925
$ 209,425
$ 523,600
$4,664 plus 22% of the excess over $40,525
$14,751 plus 24% of the excess over $86,375
$33,603 plus 32% of the excess over $164,925
$47,843 plus 35% of the excess over $209,425
$157,804.25 plus 37% of the excess over $523,600](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F9d921497-5a53-442a-a059-66fc6bff7335%2F5f4c856c-151e-4597-ac6f-67b3c2edb04a%2Fdxj5uhm_processed.png&w=3840&q=75)
Transcribed Image Text:2021 Tax Rate Schedules
Individuals
Schedule X-Single
If taxable income is over:But not over:
$ 9,950
$ 40,525
$ 86,375
$ 164,925
$ 209,425
$ 523,600
The tax is:
10% of taxable income
$ 9,950
$995 plus 12% of the excess over $9,950
$ 40,525
$ 86,375
$ 164,925
$ 209,425
$ 523,600
$4,664 plus 22% of the excess over $40,525
$14,751 plus 24% of the excess over $86,375
$33,603 plus 32% of the excess over $164,925
$47,843 plus 35% of the excess over $209,425
$157,804.25 plus 37% of the excess over $523,600
![Moana is a single taxpayer who operates a sole proprietorship. She expects her taxable income next year to be $250,000, of which
$200,000 is attributed to her sole proprietorship. Moana is contemplating incorporating her sole proprietorship. (Use the tax rate
schedule.)
a. Using the single individual tax brackets and the corporate tax rate, find out how much current tax this strategy could save Moana
(ignore any Social Security, Medicare, or self-employment tax issues). (Do not round your intermediate calculations. Round your final
answer to two decimal places.)
Current tax saved
b. How much income should be left in the corporation?
Income left](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F9d921497-5a53-442a-a059-66fc6bff7335%2F5f4c856c-151e-4597-ac6f-67b3c2edb04a%2Fdj5k5p_processed.png&w=3840&q=75)
Transcribed Image Text:Moana is a single taxpayer who operates a sole proprietorship. She expects her taxable income next year to be $250,000, of which
$200,000 is attributed to her sole proprietorship. Moana is contemplating incorporating her sole proprietorship. (Use the tax rate
schedule.)
a. Using the single individual tax brackets and the corporate tax rate, find out how much current tax this strategy could save Moana
(ignore any Social Security, Medicare, or self-employment tax issues). (Do not round your intermediate calculations. Round your final
answer to two decimal places.)
Current tax saved
b. How much income should be left in the corporation?
Income left
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