question 13

X, who is in the 37 percent tax bracket, is the sole shareholder of Inc, which manufactures greeting cards. Y's average annual net profit (before deduction of Mr. X's salary) is $370,000. Compute the income tax burden on this profit. Assume that all dividends are taxed to Individuals at a 20% tax rate. (Ignore any payroll tax consequences.) Y is an 5 corporation. X's salary is $100,000, and Ymakes no cash distributions. Assume Y's ordinary income qualifies for the 20 percent QBI deduction, subject to no limitations