Mike owns 45% and Casey owns 55% of the business. Mike works full-time at the business and takes a salary of $20,000.

• For 2019, they expect their profits to be $100,000 before paying a salary to Casey.
• They also plan on taking a total distribution of $20,000 (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 12% and Caseys marginal tax rate is 35%.
• You can ignore all self-employment taxes.

Based on the above fact pattern, answer the following questions:

S Corporation	Mike	Casey
How much cash will each receive from S Corp?
What is the business income on K-1?
What is total income reported on Form 1040?
What is the Section 199A deduction (if applicable)?
What is taxable income* on Form 1040?
What is the income tax?
How much cash would be left after paying taxes?

*you can ignore above the line deductions and standard/itemized deductions