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year of require current cash from the business, calculate t f he incorporates and operates the business throug

year of require current cash from the business, calculate t f he incorporates and operates the business throug

FINANCIAL ACCOUNTING
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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Mango, an individual, has a marginal tax rate on ordinary income of 37 percent. He currently earns $1,550,000 per year of ordinary income through a business operated as a sole proprietorship. If Mango does not require current cash from the business, calculate the potential decrease in his annual tax liability if he incorporates and operates the business through a C corporation. Assume the corporate tax rate is 21%. $155,000 $325,500 $46,500 $248,000
Transcribed Image Text:Mango, an individual, has a marginal tax rate on ordinary income of 37 percent. He currently earns $1,550,000 per year of ordinary income through a business operated as a sole proprietorship. If Mango does not require current cash from the business, calculate the potential decrease in his annual tax liability if he incorporates and operates the business through a C corporation. Assume the corporate tax rate is 21%. $155,000 $325,500 $46,500 $248,000
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