Kamal owns a restaurant that operates as an S corporation. The business earns $100,000 per year after

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Kamal owns a restaurant that operates as an S corporation. The business earns $100,000 per year after paying Kamal a salary of $50,000. Kamal and his wife Padma report the income from the restaurant on their joint tax return. Kamal and Padma are in the process of obtaining a divorce. Kamal anticipates chat he will pay Padma $30,000 per year following the divorce.

a. How \Viii the $30,000 payments be taxed?

b. Would there be any advantage to giving Padma a 30%, stock interest in the corporation in lieu of alimony?

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Federal Taxation 2019 Individuals

ISBN: 9780134739670

32nd Edition

Authors: Timothy J. Rupert, Kenneth E. Anderson

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