Moana is a single taxpayer who operates a sole proprietorship. She expects her taxable income next year to be $250,000, of which $200,000 is attributed to her sole proprietorship. Moana is contemplating incorporating her sole proprietorship. Tax Rate schedule below.

a. Using the single individual tax brackets and the corporate tax rate of 21 percent, find out how much current tax this strategy could save Moana (ignore any Social Security, Medicare, or self-employment tax issues).

b. How much income should be left in the corporation?

2019 Tax Rate Schedules Individuals Schedule X-Single If taxable income is over: |But not over: The tax is: $ 9,700 $ 0 10% of taxable income 9,700 39,475 $970 plus 12% of the excess over $9,700 $ 84,200 $4,543 plus 22% of the excess over $39,475 39,475 $ 84,200 $14,382.50 plus 24% of the excess over $84,200 $160,725 $204,100 $160,725 |$32,748.50 plus 32% of the excess over $160,725 $510,300$46,628.50 plus 35% of the excess over $204,100 $204,100 $510,300 $153,798.50 plus 37% of the excess over $510,300 Schedule Y-1-Married Filing Jointly Qualifying Widow(er) or If taxable income is over: |But not over: The tax is: $ $ 19,400 $19,400 10% of taxable income $ 78,950 $1,940 plus 12% of the excess over $19,400 $9,086 plus 22% of the excess over $78,950 $78,950 $168,400 $28,765 plus 24% of the excess over $168,400 $168,400 $321,450 $321,450 $408,200 $65,497 plus 32% of the excess over $321,450 $408,200 $612,350 $93,257 plus 35% of the excess over $408,200 $612,350 $164,709.50 plus 37% of the excess over $612,350 2019 Tax Rate Schedules Individuals Schedule X-Single If taxable income is over: |But not over: The tax is: $ 9,700 $ 0 10% of taxable income 9,700 39,475 $970 plus 12% of the excess over $9,700 $ 84,200 $4,543 plus 22% of the excess over $39,475 39,475 $ 84,200 $14,382.50 plus 24% of the excess over $84,200 $160,725 $204,100 $160,725 |$32,748.50 plus 32% of the excess over $160,725 $510,300$46,628.50 plus 35% of the excess over $204,100 $204,100 $510,300 $153,798.50 plus 37% of the excess over $510,300 Schedule Y-1-Married Filing Jointly Qualifying Widow(er) or If taxable income is over: |But not over: The tax is: $ $ 19,400 $19,400 10% of taxable income $ 78,950 $1,940 plus 12% of the excess over $19,400 $9,086 plus 22% of the excess over $78,950 $78,950 $168,400 $28,765 plus 24% of the excess over $168,400 $168,400 $321,450 $321,450 $408,200 $65,497 plus 32% of the excess over $321,450 $408,200 $612,350 $93,257 plus 35% of the excess over $408,200 $612,350 $164,709.50 plus 37% of the excess over $612,350