1) Bob is the sole shareholder of Logan Corporation. For the past five years, Logan has reported little or no taxable income as a result of paying Bob a salary of $500,000 per year. During a recent IRS audit, the revenue agent determined that Bob's educational and business experience, and his time devoted to managing Logan, justified a salary of only $200,000. Thus, the agent recharacterized $300,000 of the payments from the corporation as a dividend. What is the additional income tax liability for Logan as a result of this constructive dividend treatment. (Ignore any payroll tax consequences and assume that Logan is in the 34% marginal tax bracket and that Graham is in the 37% marginal tax bracket for ordinary income).

$300,000

$ 60,000

$102,000

$117,000

2) Assume the same facts as in #1 above. The total amount that impacts Treasury collection over the five year period is _________.