Jabar Corporation, a C corporation, projects that it will have taxable income of $315,000 before incurring any lease expenses. Jabars tax rate is 35 percent. Abdul, Jabars sole shareholder, has a marginal tax rate of 39.6 percent on ordinary income and 20 percent on dividend income. Jabar always distributes all of its after-tax earnings to Abdul.

a.

What is the amount of the overall tax (corporate level + shareholder level) on Jabar Corp.s $315,000 prelease expense income if Jabar Corp. distributes all of its after-tax earnings to its sole shareholder, Abdul (include the 3.8% net investment income tax on dividend and rental income.)?

b.

What is the amount of the overall tax on Jabar Corp.s $315,000 prelease expense income if Jabar leases equipment from Abdul at a cost of $28,800 for the year (include the net investment income tax on dividend and rental income.)?

c.

What is the amount of the overall tax on Jabar Corp.s $315,000 prelease expense income if Jabar Corp. leases equipment from Abdul at a cost of $28,800 for the year but the IRS determines that the fair market value of the lease payments is $23,500 (include the net investment income tax on dividend and rental income.)?