Purple Company has $200,000 in net income for 2022 before deducting any compensation or other payment to its soleowner, Kirsten. Kirsten is single and she claims the $12,950 standard deduction for 2022 (she has no other deductions).Purple Company is Kirsten's only source of income.Ignoring any employment tax considerations, compute Kirsten's after-tax income for each of the following situations.Click here to access the 2022 individual tax rate schedule to use for this problem. Assume the corporate tax rate is 21%.When required, carryout intermediate tax computations to the nearest cent and then round your final taxliability to the nearest dollar.a. Purple Company is a proprietorship and Kirsten withdraws $50,000 from the business during the year; Kirsten claims a$37,410 deduction for qualified business income.Kirsten's taxable income is s 149,640 ✔and her after-tax income is $170,251 ✔b. Purple Company is a C corporation and the corporation pays out all of its after-tax income as a dividend to Kirsten.Note: Individual taxpayers received preferential treatment regarding the taxation of qualified dividends (0%, 15%, 20%).For single taxpayers, the 0 percent rate applies to the first $41,675 of taxable income.Purple Corporation's after-tax income is $158,000 and Kirsten's after tax income is sc. Purple Company is a C corporation and the corporation pays Kirsten a salary of $158,000.Purple Corporation's after-tax income is $33,180 and Kirsten's after-tax income is $140,551 X.129,352>

Income Tax -One of the main sources of funding for the government is income tax. Individuals are…

Answered: Purple Company has $200,000 in net…

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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In 2023, Purple Company reports $200,000 in net income before deducting any compensation or other payment to its sole owner, Kirsten. Kirsten is single and she claims the $13,850 standard deduction for 2023 (she has no other deductions). Purple Company is Kirsten's only source of income. Ignoring any employment tax considerations, compute Kirsten's after-tax income if: (LO.1) a. Purple Company is a proprietorship and Kirsten withdraws $50,000 from the business during the year; Kirsten claims a $37,230 deduction for qualified business income. b. Purple Company is a C corporation and the corporation pays out all of its after- tax income as a dividend to Kirsten. c. Purple Company is a C corporation and the corporation pays Kirsten a salary of $158,000.
Eva received $85,000 in compensation payments from JAZZ Corporation during 2022. Eva incurred $17,000 in business expenses relating to her work for JAZZ Corporation JAZZ did not reimburse Eva for any of these expenses. Eva is single and deducts a standard deduction of $12,950. Based on these facts, answer the following questions: Use Tax Rate Schedule for reference. Note: Leave no answer blank. Enter zero if applicable. Round your intermediate and final answers to the nearest whole dollar amount. Required: Assume that Eva is considered to be a self-employed contractor. What is her regular tax liability for the year?
Alice is single and self-employed in 2022. Her net business profit on her Schedule C for the year is $166,000. What are her self-employment tax liability and additional Medicare tax liability for 2022?
How does the tax benefit rule apply in the following cases? a. In 2019, the Orange Furniture Store, an accrual method sole proprietorship, sold furniture on credit for $1,000 to Sammy. The cost of the furniture was $600. In 2020, Orange took a bad debt deduction for the $1,000. In 2021, Sammy inherited some money and paid Orange the $1,000 he owed. Orange's owner was in the 35% marginal tax bracket in 2019, the 12% marginal tax bracket in 2020, and the 35% marginal tax bracket in 2021. Orange Furniture must include $fill in the blank 102a7e000ffcfe0_1 in gross income as the recovery of a prior deduction. The timing of the income and deductions cost Orange $fill in the blank 102a7e000ffcfe0_2. b. In 2020, Marvin, a cash basis taxpayer, took a $2,000 itemized deduction for state income taxes paid; the deduction was not limited by the SALT cap. This increased his itemized deductions to a total that was $800 more than the standard deduction. In 2021, Marvin received a…
Mr. Coleman, an unmarried individual, has the following income items: Interest income Schedule C net profit $23,200 61,640 He has $10,300 itemized deductions and no dependents. Mr. Coleman's Schedule C income is qualified business income (non service). Required: Compute Mr. Coleman's income tax. Assume the taxable year is 2020. Use Individual Tax Rate Schedules and Standard Deduction Table. (Round your intermediate calculations and final answers to the nearest whole dollar amount.) AGI Taxable Income Income tax Amount
Domestic
Da
Eva received $72,000 in compensation payments from JAZZ Corporation during 2022. Eva incurred $10,500 in business expenses relating to her work for JAZZ Corporation JAZZ did not reimburse Eva for any of these expenses. Eva is single and deducts a standard deduction of $12,950. Based on these facts, answer the following questions: Use Tax Rate Schedule for reference. Note: Leave no answer blank. Enter zero if applicable. Round your intermediate and final answers to the nearest whole dollar amount. Required: Assume that Eva is considered to be an employee. What amount of FICA taxes is she required to pay for the year? Assume that Eva is considered to be an employee. What is her regular income tax liability for the year? Assume that Eva is considered to be a self-employed contractor. What are her self-employment tax liability and additional Medicare tax liability for the year? Assume that Eva is considered to be a self-employed contractor. What is her regular tax liability for the year?
In 2022, Miranda records net earnings from self-employment of $171,000. She has no other income. Determine the amount of Miranda's self-employment tax and her AGI income tax deduction. In your computations, for the tax liability, round interim amounts to two decimal places and the final answer to the nearest whole dollar. For the AGI deduction, if necessary, use amounts that have been rounded to the nearest dollar. Miranda's self-employment tax is s and she has a deduction for AGI.
Which of the following taxpayers is/are subject to the net investment income tax?None of the taxpayers have any investment expenses allocable to their investment income. Brian and Erika. They are married and will file a joint return. Their only income consists of a $2,000 capital gain distribution from a mutual fund they own and income from wages. Their 2023 modified adjusted gross income is $265,000. Cassandra. She will use the single filing status. All her income is from wages, although she did purchase a painting for $25,000 at the beginning of the year. At the end of the year, she was thrilled to learn that its appraised value was $30,000. She continues to hold the painting, hoping it will increase in value even more. Cassandra's 2023 modified adjusted gross income is $245,000. Jordan. He is married but will file a separate return. His only income consists of a $5,000 capital gain from the sale of stock and income from wages. Jordan's 2023 modified adjusted gross income is…
Eva received $60,000 in compensation payments from JAZZ Corp. during 2020. Eva incurred $5,000 in business expenses relating to her work for JAZZ Corp. JAZZ did not reimburse Eva for any of these expenses. Eva is single and she deducts a standard deduction of $12,400. Based on these facts, answer the following questions: Use Tax Rate Schedule for reference. (Leave no answer blank. Enter zero if applicable.) c. Assume that Eva is considered to be a self-employed contractor. What is her self-employment tax liability and additional Medicare tax liability for the year
The table below gives tax information for three different workers in 2009. Each worker used the standard deduction and claimed all available exemptions. Assuming that none of the workers had any additional adjustments, fill in the missing information in the table. Use the example as a guide. In the 2009 tax year, each exemption was worth $3650. Also, for the "Single" and "Married filing separately" filing statuses, the standard deduction was $5700, for "Head of household," it was $8350, and for "Married filing jointly," it was $11,400. Help me fill out the table?

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