Mike and Casey are siblings that have started their own business. When they first created their business, they formed an S Corporation. They are considering changing to a C Corporation and but first want to know the tax implications to each of them individually as well as the corporation.

Mike owns 55% and Casey owns 45% of the business. Mike works full-time at the business and takes a salary of $40,000.

• For 2019, they expect their profits to be $300,000 before paying a salary to Casey.
• They also plan on taking a total distribution of $80,000 (allocated based on ownership percentage)
• For this project, assume that all business transactions are cash transactions.
• All business income of the S Corporation is eligible for Section 199A deduction for Mike and Casey.
• Mike and Casey also have other sources of income, which you will ignore, except that you need to know that Mikes marginal tax rate is 37% and Caseys marginal tax rate is 12%.

You can ignore all self-employment taxes.

	S Corporation	C Corporation
What is the taxable income of the corporation?
What is the tax?
What is the cash available to corporation from profits after paying taxes and distributions/dividends?