Orie and Jane, husband and wife, operate a sole proprietorship. They expect their taxable income next year to be $450,000, of which $250,000 is attributed to the sole proprietorship. Orie and Jane are contemplating incorporating their sole proprietorship. (Use the tax rate schedule.) Required: a. Using the married - joint tax brackets and the corporate tax rate, find out how much current tax this strategy could save Orie and Jane. b. How much income should be left in the corporation?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Orie and Jane, husband and wife, operate a sole proprietorship. They expect their taxable income next year
to be $450,000, of which $250,000 is attributed to the sole proprietorship. Orie and Jane are contemplating
incorporating their sole proprietorship. (Use the tax rate schedule.) Required: a. Using the married - joint tax
brackets and the corporate tax rate, find out how much current tax this strategy could save Orie and Jane. b.
How much income should be left in the corporation?
Transcribed Image Text:Orie and Jane, husband and wife, operate a sole proprietorship. They expect their taxable income next year to be $450,000, of which $250,000 is attributed to the sole proprietorship. Orie and Jane are contemplating incorporating their sole proprietorship. (Use the tax rate schedule.) Required: a. Using the married - joint tax brackets and the corporate tax rate, find out how much current tax this strategy could save Orie and Jane. b. How much income should be left in the corporation?
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