Mr. Lion, who is in the 39.6 percent tax bracket, is the sole shareholder of Toto, which manufactures greeting cards. Totos average annual net profit (before deduction of Mr. Lions salary) is $370,000. For each of the following cases, compute the income tax burden on this profit. (Ignore any payroll tax consequences.) UseTax Rate.

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

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

c.Toto is an S corporation. Mr. Lions salary is $100,000, and Toto makes no cash distributions.

d.Toto is an S corporation. Mr. Lion draws no salary, and Toto makes no cash distributions.

e.Toto is an S corporation. Mr. Lion draws no salary, and Toto makes cash distributions of all its income to Mr. Lion.