Discussion Question 1 Peach Corporation would like to transfer excess cash to its sole shareholder, Danny, who is also an employee. Danny is in the 28% tax bracket, and Peach is in the 34% bracket. Because Danny's contribution to the business is substantial, Peach believes that a $50,000 bonus in the current year is reasonable compensation and should be deductible by the corporation. However, Peach is considering paying Danny a $50,000 dividend because the tax rate on dividends is lower than the tax rate on compensation. Is Peach correct in believing that a dividend is the better choice? Why or why not? If you would have been given the responsibility, how would you have handled this situation? Discuss. Discussion Question 2 George Corporation redeems 100 shares of its stock from Jerry for $10,000. Jerry's basis in those shares is $8,000. Explain possible alternative tax treatments of Jerry's receiving the $10,000.