eBook Problem 17-32 (LO. 3, 7) Benton Company (BC), a calendar year entity, has one owner, who is in the 37% Federal income tax bracket (any net capital gains or dividends would be taxed at a 20% rate). BC's gross income is $395,000, and its ordinary trade or business deductions are $245,000. Ignore the standard deduction (or itemized deductions) and the deduction for qualified business income. If required, round computations to the nearest dollar. a. BC is operated as a proprietorship, and the owner withdraws $100,000 for personal use. BC's taxable income for the current year is 150,000 V, and the tax liability associated with the income from the sole proprietorship is $ 55,500 V. Feedback b. BC is operated as a C corporation, pays out $100,000 as salary but no dividends to its shareholder. 50,000, and BC's tax liability is $ BC's taxable income for the current year is $ liability is $ Fredback 37,000 V. 10,500 The shareholder's tax c. BC is operated as a C corporation and pays out no salary or dividends to its shareholder. BC's taxable income for the current year is 150,000 V, and BC's tax liability is $ 31,500 . Feedback d. BC is operated as a C corporation, pays out $100,000 as salary to its shareholder, and pays out the remainder of its earnings as dividends to its shareholder. BC's taxable income for the current year is $ 50,000, and BC's tax liability is $ 10,500 .The shareholder's tax liability is $ Feedback 44,900 e. Assume that Robert Benton of 1121 Monroe Street, Ironton, OH 45638 is the owner of BC, which was operated as a proprietorship. Robert is thinking about incorporating the business for next year and asks your advice. He expects about the same amounts of income and expenses and plans to take $100,000 per year out of the company whether he incorporates or not. Complete the letter to Robert containing your recommendations. [Based on your analysis in (a), BC is operated as a proprietorship, and the owner withdraws $100,000 for personal use, and in (b), BC is operated as a corporation, pays out $100,000 as salary, and pays no dividends to its shareholder.] Maloney, Raabe, Young, Nellen, & Hoffman, CPAs 5191 Natorp Boulevard Mason, OH 45040