Mary Henderson is planning to start a new business, MH Enterprises, and she must decide whether to incorporate or to do business as a sole proprietorship. Under either form, Henderson will initially own 100 percent of the firm, and tax considerations are important to her. She plans to finance the firm’s expected growth by drawing a salary just sufficient for her family living expenses, which she estimates will be about $40,000, and by retaining all other income in the business. Assume that as a married woman with one child, she files a joint return. She has income tax exemptions of 3  $2,900  $8,700, and she estimates that her itemized deductions for each of the 3 years will be $9,400. She expects MH Enterprises to grow and to earn income of $52,700 in 2003, $90,000 in 2004, and $150,000 in 2005. Which form of business organization will allow Henderson to pay the lowest taxes (and retain the most income) during the period from 2003 to 2005? Assume that the tax rates given in the chapter are applicable for all future years. (Social Security taxes would also have to be paid, but ignore them.)