Question
Jane Shay operates a management consulting business, The business has been successful and now produces a taxable income of $150,000 per year after all ordinary
Jane Shay operates a management consulting business, The business has been successful and now produces a taxable income of $150,000 per year after all "ordinary and necessary" expenses and depreciation have been deducted. At present business is operated as a proprietorship; that is, Jane pays personal federal income tax on the entire $150,000. For tax purposes, it is as if she had a job that pays her a $150,000 salary per year. As an alternative, Jane is considering incorporating the business. If she does, she will pay herself a salary of $75,000 a year from the corporation. The corporation will then pay taxes on the remaining $75,000 and retain the balance of the money as a corporate asset. Thus Jane's two alternatives are to operate the business as a proprietorship or as a corporation, Jane is single and has $3500 of itemized personal deductions. Using the 2009 tax schedule, the income tax Jane would be required to pay operating her business as a proprietorship is 2009 Personal Exemption - $3650 2009 Standard Deduction - $5700
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The Answer Must be : | $33,102 |
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