Mr. Lion, who is in the 37 percent tax bracket, is the sole shareholder of Toto,Inc., which manufactures greeting cards. Totos average annual net profit (before deduction of Mr. Lions salary) is $400,000. For each of the following cases, compute the income tax burden on this profit. (Ignore any payroll tax consequences.)

Mr. Lions salary is $100,000, and Toto pays no dividends.

Mr. Lions salary is $100,000, and Toto distributes its after-tax income as a dividend.

Toto is an S corporation. Mr. Lions salary is $100,000, and Toto makes no cash distributions. Assume Toto's ordinary income qualifies for the 20 percent Section 199A deduction.

Toto is an S corporation. Mr. Lion draws no salary, and Toto makes no cash distributions. Assume Toto's ordinary income qualifies for the 20 percent Section 199A deduction.

Toto is an S corporation. Mr. Lion draws no salary, and Toto makes cash distributions of all its income to Mr. Lion. Assume Toto's ordinary income qualifies for the 20 percent Section 199A deduction.

(United States)