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. (Use the tax rate schedule and corporate income tax brackets).

a.	Using the single individual tax brackets and the corporate tax brackets, 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?

2015 tax rate schedule INSERT1 Schedule X- Single Schedule Z-Head of Household If taxable income 3 over. If taxable income i Butnot over Butnot over The tax is 10% of taxable income $922.50 plus 15% of the excess over $9,225 $5,156.25 plus 25% of the excess over $37,450 $18,481.25 plus 28% of the excess over $90,750 $46,075. 25plus 33% of the excess over $189,300 $119,401.25 plus 35% of the excess over $411,500 $119,996.25 plus 39.6% of the excess over $413,200 The tax is 10% of taxable income $1,315.00 plus 15% of the excess over $13,150 $6,872.50 plus 25% of the excess over $50,200 $26,722.50 plus 28% of the excess over $129,600 $49,192.50 plus 33% of the excess over $209,850 $115,737.00 plus 35% of the excess over $411,500 $125,362.00 plus 39.6% of the excess over $439,000 over SO 9,225 S37,450 90,750 S189.300 $411,500 $413,200 S37,450 $90.750 | S 189.300 | S41 1,500 | $13,150 S50-200 | $129,600 $209.850 | S41 1,500 $439,000 $13,150 S129.600 $209,850 $411,500 S439,000 S41 3.200 Schedule Y-1-Married Fil intly of Qualifying Widower) Schedule Y-2- Married Filing Separatel If taxable income 3 over. If taxable income is But not over But not over The tax is 10% of taxable income $1,845.00 plus 15% of the excess over $18,450 $10,312.50 plus 25% of the excess over $74,900 $29,387.50 plus 28% of the excess over $151,200 $51,577.50plus 33% of the excess over $230,450 $111,324.00 plus 35% of the excess over $411,500 $129,996.50 plus 39.6% of the excess over $464,850 The tax is 10% of taxable income $922.50 plus 15% of the excess over $9,225 $5,156.25 plus 25% of the excess over $37,450 $14,693.75 plus 28% of the excess over $75,600 S25,788.75plus 33% of the excess over $115,225 $55,662.00 plus 35% of the excess over $205,750 $64,998.25 plus 39.6% of the excess over $232,425 over S0 S18,450 $74,900 151,200 S18,450 $74.900 | 9.225 S37,450 S 75.600 | S0 S37,450 575,600 $115,225 $205.750 S232,425 $151 $115 $230,450 | S41 1,500 $464.850 S205.750 | $232,425 | $411,500 5464,850