Ms. Xie, who is in the 37 percent tax bracket, is the sole shareholder and president of Xenon. The corporations financial records show the following.

Gross income from sales of goods

$

1,599,000

Operating expenses

(933,000

)

Salary paid to Ms. Xie

(303,000

)

Dividend distributions

(203,000

)

1. Compute the combined tax cost for Xenon And Ms. Xie. (Ignore payroll tax.)
2. How would your computation change if Ms. Xies salary was $506,000 and Xenon paid no dividends?

3. Compute the combined tax cost for Xenon and Ms. Xie. (Ignore payroll tax.)

   A
   Xenon's tax	$
   Ms. Xies tax on salary	112,110
   Ms. Xies tax on dividend	40,600
   Total income tax cost	$275,110

4. How would your computation change if Ms. Xies salary was $506,000 and Xenon paid no dividends?

   B
   Xenon's tax	$
   Ms. Xies tax on salary	s
   Total income tax cost	$