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?

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

Section: Chapter Questions

Problem 1Q

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You are working with a client, Donna, who has come to you letting you know she has no income tax problems for the year, but she wants to run her situations by you, just in case there might be some unexpected tax liability. In the current year, she has the following information to share with you: 1. Donna's share of the SAT partnership income is $150,000, but none of the income can be distributed because the partnership needs the cash for operations. 2. Donna's social security benefits totaled $10,500, but she loaned the cash received to her nephew. 3. Donna assigned to a creditor the right to collect $1,500 of interest on some bonds she owned. 4. Donna and her husband lived together in California until September, when they separated. Donna has heard through the grapevine that her husband has substantial gambling winnings since they separated. 5. Donna found $50,000 in an airport bar, no one came to claim it while she was waiting for her flight, so she kept the envelope. Please draft an…
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Discuss the law that applies to this issue and then answer the questions at the end of the paragraph.
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.) a) Using the married-joint tax brackets and 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?
n each of the following cases, discuss how the taxpayers might respond to a tax rate increase in a manner consistent with the income effect. a. Mr. Edwards earns $32,000 a year as an employee, and Mrs. Edwards doesn’t work.b. Mr. Frank earns $22,000 a year as an employee, and Mrs. Frank earns $10,000 a year as a self-employed worker.c. Mr. George earns $22,000 a year as an employee, and Mrs. George earns $10,000 a year as an employee.
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Liam has a gross income of $120,000 and takes the standard deduction. 1) What are his total taxes due? 2) What is his marginal tax rate? 3) What is his effective tax rate? Round to the neared hundredth of a percent.