FOR 2021

32) Bono owns and operates a sole proprietorship and has a 32 percent marginal tax rate. He provides his son, Richie, $24,000 a year for college expenses. Richie works as a street musician and has a marginal tax rate of 15 percent. What could Bono do to reduce his family tax burden? How much pretax income does it currently take Bono to generate the $24,000 after taxes given to Richie? If Richie worked for his father's sole proprietorship, what salary would Bono have to pay him to generate $24,000 after taxes? (Ignore any Social Security, Medicare, or self-employment tax issues.) How much money would this strategy save