Georgia, a single taxpayer, operates a business that produces $100,000 of income before any amounts are paid to her. She has no dependents and no other income. She has itemized deductions of $18,000. Compute the total income tax that would be paid assuming the following additional facts. Ignore payroll taxes.
a. Georgia operates the business as an S corporation receiving a salary from the corporation of $60,000. The corporation distributes all of its remaining income to the shareholders.
b. She operates the business as a C corporation receiving a salary from the corporation of $60,000. The corporation distributes its after tax income to her as a dividend.
c. How would the total tax change in each of the first two requirements if the corporation made no payments to the owner other than the salary?