Nittany Company pays its sole shareholder, Tammy Lion, a salary of $105,000. At the end of each year, the company pays Tammy a bonus equal to the difference between the corporations taxable income for the year (before the bonus) and $67,000. In this way, the company hopes to keep its taxable income at amounts that are taxed at either 15 percent or 25 percent. This year, Nittany reported prebonus taxable income of $739,000 and paid Tammy a bonus of $672,000. On audit, the IRS determined that individuals working in Tammys position earned on average $336,000 per year. The company had no formal compensation policy and never paid a dividend. Refer Corporate tax table.

a.	How much of Tammys bonus might the IRS recharacterize as a dividend?

c.	Assuming the IRS recharacterizes $220,500 of Tammys bonus as a dividend, what additional income tax liability does Nittany Company face?