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In the current year, Azure Company has $500,000 of net operating income before deducting any compensation or other payment to its sole owner, Sasha. In
In the current year, Azure Company has $500,000 of net operating income before deducting any compensation or other payment to its sole owner, Sasha. In addition, Azure has a long-term capital gain of $50,000. Sasha has significant income from other sources and is in the 35% marginal tax bracket. Based on this information, determine the income tax consequences to Azure Company and to Sasha during the year for each of the following independent situations. a. Azure is a C corporation and pays no dividends or salary to Sasha. b. Azure is a C corporation and distributes $100,000 of dividends to Sasha. c. Azure is a C corporation and pays $100,000 of salary to Sasha. d. Azure is a sole proprietorship and Sasha withdraws $0. e. Azure is a sole proprietorship and Sasha withdraws $100,000
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