Bob Borchgrevink, the owner of Borch’s Motel, has recently learned about the concept of double taxation. He wants to know how much tax he and his incorporated motel would pay in each of the following situations:

® Borch’s Motel earns pre-tax income of $100,000 after paying Bob a salary of $50,000 during 20X1. Borch’s Motel also pays Bob $50,000 in dividends during 20X1.

= Borch’s Motel earns pre-tax income of $80,000 after paying Bob a salary of $70,000 during 20X1. Borch’s Motel also pays Bob $30,000 in dividends during 20X1.

# Borch’s Motel earns pre-tax income of $60,000 after paying Bob a salary of $90,000 during 20X1. Borch’s Motel also pays Bob $10,000 in dividends during 20X1.

Required:

1. Ignoring Bob’s deductions and exemptions, calculate the total income taxes paid by Bob and his corporation for each of the above situations, using an average corporate tax rate of 20% and an average individual tax rate of 25%.

2. Ignoring Bob’s deductions and exemptions, calculate the total income taxes paid by Bob and his corporation for each of the above situations, using an average corporate tax rate of 25% and an average individual tax rate of 20%.