Consider Art, an individual who operates as a proprietor. Art earns $450,000 annually as a proprietor and is the only earner in his family of 4. His wife does not work and his children, Anna and Steven, are 18 & 20 years old and attending school. Which course of action would result in the largest overall tax savings while maintaining the same $450,000 of income?

Choose the correct answer.

A.

Incorporate the business and pay each person within Art's family a reasonable salary.

B.

Incorporate the business as a CCPC and take advantage of the small business deduction.

C.

Incorporate the business and characterize the income to Art as part dividends, part wages.

D.

Incorporate the business and hire additional employees to increase overall business deductions.