Karl Trudell and Tucker Brinkman began a new consulting business on January 1, 2019. They organized the business as a C corporation, KT, Inc. During 2019, the corporation was successful and generated revenues of $2,400,000. KT had operating expenses of $725,000 before any payments to Karl or Tucker. During 2019, KT paid dividends to Karl and Tucker in the amount of $180,000 each. Assume that Karl's wife earned $130,000 from her job, they file a joint return, have itemized deductions of $40,000, and have no children. (Assume the qualified dividends tax rate is 15%.)

 

 

Requirement a. Compute the total tax liability of KT and Karl and his wife for 2019.

Requirement b. Instead of organizing the consulting business as a C corporation, assume Karl and Tucker organized the business as a limited liability company. KT. LLC. KT made a distribution of $180.000 each to Tucker during 2019. Compute the total tax liability of KT and Karl for 2019. Ignore any and additional tax on net investment income.

STANDARD DEDUCTION Filing Status 24 A00 Married individunis tiling joint returns and surviving spouses t350 Heads of households 12.200 Unmarried individuals (other than surviving spouses and heads of households) 12.200 Married individuals filing separate returns $1.300 Additionat standard deduction for the aged and the blind; Individual who is married and surviving spouses S1.00 Addidional wtandard deduction for the aged and the blind; Individual who is unmarried and not a surviving spouse Taxpayer claimed as dependent on another taxpayer's return: Greater of (1) earned income plus $350 or (2) $1.100. These anounts are 1200 and S3.300 rempectively. fur a taxpaye who is both aged and bind