Compute the rederal income tax lablty on GC$\text{'}$s income for the ourrent year under the following asuarptions. Ionore the standard

deduction $($er itemaed deductions$)$ and the deduction for eualined tulineis income.

If required, round computations to the nearest dollar.

Cecs tawable income for the current year is $1,{?}^{\text{'}},$ and the tax babety associated wath the income trom the sole

proprietorship is $(\frac{53,500}{\text{\$}})vv$

b$.$ QC is coerated as a C corporation, pars out $$100,000$ as salary but no dwidends to its sharebolser.

lablty is $5$

C$.$ GC is operated as a C corporabion and pars out no salary or dividends to its shareholdec. CCly twable income for the ourrent year is

$,$ and CCs tax lisblicy is

$.$ The guareholder's tax lablity is

SWiT, ILP

$S191$ Natorp Bonlevard

Mason, $OH145040$

Decinber $4,2023$

M$.$ Raphad Geresis

$1121$ Morroe street

buortion, OP $4563$s

Dear Mr$,$ Conesis:

futher and pou provide me with some addional information. My analyis based on irformation you have given me to date is

presented belom.

Cempuation $1$

focal Exr en $$150,000$ if you continut as a

proprietorship

Potal tex if you neorporate:

Indibus tax on $$900,000$ salary

Corporate tax on tavalie income

Fotal

tax on the :

of income left in the corporation of you withdrin that amourt as a didend in the fhure, as

calculated telew:

Cempuation $2$

Aher tax income let in corporation

Tax on after$-$tax income

Total tax paid e you incorporate

in the corporation as longterm capital gan from as sole of stsck in the future, the total tax cout of incorporating will be the same.

Comsertation $3$

Ater$-$tax income ieft in corporation

Tax on after$-$tax incere

Total tax paid if you incorporate

In summary, Insorporattin $*$ appears to be the more attractive option. Howeve, there are important nontax.

considerations whth respect to this decinion. We can discuss those issues at our neet meeting.

choice.

sencerelt

Jon Themas, CPA