Georgia

operates a business that produces

$100,000

of income before any amounts are paid to her. She is married, and her spouse receives

$90,000

of salary from an unrelated employer. They file jointly, have

$31,000

of itemized deductions, and have no dependents. (The tax year is

2021.)

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(Click the icon to view the standard deduction amounts.)

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(Click the icon to view the

2021

tax rate schedule for the Married filing joint filing status.) Read the requirement

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.

Question content area bottom

Part 1

a.

Georgia

operates the business as an S corporation receiving a salary from the corporation of

$70,000.

The corporation distributes all of its remaining income to the shareholders.Begin by calculating taxable income for

Georgia

under this

scenario.

Salaries	70000
S corporation income	25000
Adjusted gross income	90000
Minus:
Itemized deductions	15000
Qualified business income deduction	4050
Taxable income

Part 2

Now enter the income tax that would be paid by

Georgia

and the corporation under this scenario, and compute the total income tax. (Use the

2021

tax rate schedules for all tax calculations. Enter a "0" if no tax is due. Do not round any intermediary calculations. Round your final tax liability to the nearest whole dollar.)

Income tax paid by	Amount of tax
Georgia
Corporation
Total income tax

Part 3

Next compute the total income tax that would be paid assuming the additional facts under scenario (b). Ignore payroll taxes.

b. She operates the business as a C corporation receiving a salary from the corporation of

$70,000.

The corporation distributes its after tax income to her as a dividend.Begin by calculating taxable income for

Georgia

under this

scenario.

(Enter a "0" for any zero amounts.)

Minus:

Taxable income

Part 4

Now enter the income tax that would be paid by

Georgia

and the corporation under this scenario. (Use the

2021

tax rate schedules for all tax calculations. Do not round any intermediary calculations. Round your final tax liability to the nearest whole dollar.)

Income tax paid by	Amount of tax
Georgia
Corporation
Total income tax

Part 5

c. How would the total tax change in each of the first two requirements if the corporation made no payments to the owner other than the salary?

Let's begin by calculating any change in tax under the set of facts for scenario (a), assuming that the corporation made no payments to the owner other than the salary. (Enter a "0" for no change in tax.)

Income tax paid by	Net effect on tax	Increase (decrease) in income tax
Georgia
Corporation

Part 6

Now calculate any change in tax under the set of facts for scenario (b), assuming that the corporation made no payments to the owner other than the salary. (Enter a "0" for no change in tax. Use a minus sign or parentheses for a decrease in tax.)

Income tax paid by	Net effect on tax	Increase (decrease) in income tax
Georgia
Corporation