Focus on the short term: If A, an entertainer, were averaging $1 million a year of taxable income from his business, would you advice A to incorporate as s device to save taxes? Would you advice A to make a S election for the corporation? To help you answer these questions, compare the net after-tax cash. A would have after a full year (a) as a sole proprietor, (b) as the shareholder and only employees of an S corporation that pays him a $1 million salary, or (c) as te shareholder and only employee of a C corporation that pays him all of its after-tax income salary. Would he do better if he used a pays him all of its after-tax income as salary. Would he do better if he used a C corporation that paid him a $500K salary and he either received the maximum possible dividend or sold the stock the next year? What would result if he took a $500K salary from his S corporation and sold the stock next year?