Jane owns100% of Carnate Corporation’s stock and also runs the company as its CEO. Carnate is a C corporation that expects to earn $420,000 before deducting any salary paid to Jane. Jane wants the corporation to pay her $230,000 for current year in pretax dollars. She is considering three different options:

(1) A $230,000 dividend.

(2) A $115,000 dividend plus a $115,000 salary, or

(3) A $230,000 salary.

Any dividends qualify for the preferential capital gains tax rates. Jane's husband has no earnings of his own in the current year, so her income is the sole source for the family.Jane and her husband file a joint tax return and claim the $24,000 standard deduction.

Married, Filing Joint and Surviving Spouse

If taxable income is: The tax is:

Not over $19,050. . . . . . . . . . . . . . . . . . . . . . 10% of taxable income.

Over $19,050 but not over $77,400. . . . . . . $1,905.00 + 12% of the excess over $19,050.

Over $77,400 but not over $165,000. . . . . . $8,907.00 + 22% of the excess over $77,400.

Over $165,000 but not over $315,000. . . . . $28,179.00 + 24% of the excess over $165,000.

Over $315,000 but not over $400,000. . . . . $64,179.00 + 32% of the excess over $315,000.

Over $400,000 but not over $600,000. . . . . $45,689.50 + 35% of the excess over $400,000.

Over $600,000. . . . . . . . . . . . . . . . . . . . . . . . $80,689.50 + 37% of the excess over $600,000.

Preferential Rates for Adjusted Net Capital Gain (ANCG) and Qualified Dividends

LTCG Rate	Single	Filing Jointly*	Head of Household
0%	Up to $38,600	Up to $77,200	Up to $51,700
15%	> $38,600 but not over $425,800	> $77,200 but not over $479,000	> $51,700 but not over $452,400
20%	Over $425,800	Over $479,000	Over $452,400

* The corresponding amounts if married filing separately are half of the amounts for filing jointly. The preferential rate is zero for taxable income up to

$ 38 comma 600$38,600

if married filing separately.

Calculate the total tax liability (corporate and individual) for each of the threeoptions, and determine which option results in the lowest overall tax.