Keith Thomas and Thomas Brooks began a new consulting business on January 1, 2018. They organized the business as a C corporation, KT, Inc. During 2018, the corporation was successful and generated revenues of $2,000,000. KT had operating expenses of $800,000 before any payments to Keith or Thomas. During 2018, KT paid dividends to Keith and Thomas in the amount of $450,000 each. Assume that Keiths wife earned $120,000 from her job, they file a joint return, have itemized deductions of $40,000, and have no children.

a) Compute the total tax liability of KT and Keith and his wife for 2018.

b) Instead of organizing the consulting business as a C corporation, assume Keith and Thomas organized the business as a limited liability company, KT, LLC. KT made a distribution of $450,000 each to Keith and Thomas during 2018. Compute the total tax liability of KT and Keith for 2018. Ignore any additional tax on net investment income.