Problem 3-52 (LO 3-4) (Static) 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.) Required: 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). b. How much income should be left in the corporation?
Problem 3-52 (LO 3-4) (Static) 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.) Required: 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). b. How much income should be left in the corporation?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Problem 3-52 (LO 3-4) (Static)
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.)
Required:
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).
b. How much income should be left in the corporation?
Complete this question by entering your answers in the tabs below.
Required A Required B
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).
Current tax saved
$
13,835
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