Lois and Clark are both single and neither one has any dependents. They are 50 percent co-owners of a new business and they are trying to decide whether to organize the business as a partnership or a C corporation. They know that one of the factors to consider is the tax impact of the organizational form. Create an Excel spreadsheet that will compute the 2016 income tax payable by Lois and Clark and by their business entity. Use the corporate and individual tax calculators available on Blackboard. Lois receives an annual salary of $120,000. Clark receives an annual salary of $80,000. Their only other source on income is their business. Both use the standard deduction ($6,300 for a single individual) and can claim one $4,050 personal exemption. The business income will pass through to Lois and Clark in equal amounts if their business is organized as a partnership. None of the income qualifies as self-employment income. If the business is organized as a corporation, the income will be taxed at the corporate level.

Compute the taxes payable by Lois and Clark assuming their business is a partnership that earns the following amounts of income.Then compute the tax payable by Lois, Clark, and the corporation assuming the same business income amounts:

-$30,000.

-$5,000.

$0.

$5,000.

$50,000.

$100,000.

$150,000.

$500,000.

$1,000,000.

The computation should be of the 2016 tax only, without regard to the effects of any carryforwards or carrybacks to other tax years. Keep in mind that the deduction for personal exemptions is phased out when adjusted gross income exceeds a threshold.

2. Based on your findings, what do you recommend to Lois and Clark?