Nittany Company pays its sole shareholder, Tammy Lion, a salary of $109,800. 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 $68,500. 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 pre-bonus taxable income of $738,500 and paid Tammy a bonus of $670,000. On audit, the IRS determined that individuals working in Tammys position earned on average $335,000 per year. The company had no formal compensation policy and never paid a dividend. Refer Corporate tax table.

Problem 18-47 Part-c

c. Assuming the IRS recharacterizes $222,400 of Tammys bonus as a dividend, what additional income tax liability does Nittany Company face?