Mike Barton owns Barton Products, Inc. The corporation has 30 employees. Barton Corporation expects $800,000 of net income before taxes in 2016. Mike is married and files a joint return with his wife, Elaine, who has no earnings of her own. They have one dependent son, Robert, who is 16 years old. Mike and Elaine have no other income and do not itemize. Mike's salary is $180,000 per year (already deducted in computing Barton Corporation's $800,000 net income). Assume that variations in salaries will not affect the U.S. production activities deduction already reflected in taxable income.

A.) Should Mike increase his salary by $50,000.00 to reduce the overall tax burden to himself and Barton Products? Because of the social security cap, the corporation and and Mike each would incur a 1.45% pay roll tax with the corporate portion being deductible.

B.) Should Barton employ Mike's wife Elaine for $50,000 rather than increase Mike's salary? Take into consideration employment taxes as well as federal income taxes. Note, that Elaine's salary would be well below the Social Security cap, so that she and the corporation each would incur the full amount of payroll taxes with the corporate portion being deductible. Both Elaine's and the corporation's portion is 7.65%

Mike Barton owns Barton Products, Inc. The corporation has 30 employees. Barton Corporation expects $800,000 o Mike is married and files a joint return with his wife, Elaine, who has no earnings of her own. They have one depend Mike and Elaine have no other income and do not itemize. Mike's salary is $180,000 per year (already dedcuted in c $800,000 net income). Assume that variations in salaries will not affect the U.S. production activities deduction alre Gross Net $ 800,000.00 $ 500,000.00 $ 300,000.00 Tax Rate: 37.5 A.) Should Mike increase his salary by $50,000.00 to reduce the overall tax burden to himself and Barton Products? the corporation and and Mike each would incur a 1.45% pay rolltax with the corporate protion being deductible. B.) Should Barton employ Mike's wife Elaine for $50,000 rather than increase Mike's salary? Take into consideration federal income taxes. Note, that Elaine's salary would be well beloe the Social Security cap, so that she and the corp of payroll taxes with the corporate portion being deductible. Borth Elaine's and the corporation's portion is 7.65% ation expects $800,000 of net income before taxes in 2016. n. They have one dependent son, Robert, who is 16 years old. ar (already dedcuted in computing Barton Corporation's activities deduction alread reflected in taxable income. lf and Barton Products? Because of the social security cap, tion being deductible. ? Take into consideration employment taxes as well as so that she and the corporation each would incur the full amount tion's portion is 7.65%