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Fin Karen owns 100% of Carbon Corporation's stock and also runs the company as its CEO. Carbon is a C corporation that expects to
Fin Karen owns 100% of Carbon Corporation's stock and also runs the company as its CEO. Carbon is a C corporation that expects to earn $430,000 before deducting any salary paid to Karen. Karen wants the corporation to pay her $270,000 for the current year in pre-tax dollars. She is considering three different options: (1) a $270,000 dividend, (2) a $135,000 dividend plus a $135,000 salary, or (3) a $270,000 salary (Click the icon to view additional information.) (Click the icon to view the tax rate schedules for 2021.) Read the requirement (Click the icon to view the standard deductions for 2021) Co First, calculate the total tax liability (corporate and individual) for each of the three options. Start with option 1, then optio2, and finally option 3. Option 1: a $270.000 Option 2 a $135,000 dividend Option 3 a $270,000 plus a $135,000 salary salary dividend Ind To Corporation WE Individual Total tax Which option results in the lowest overall tax?
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