Question $2$: Form of Business

Kate Brown has operated her small repair shop as a sole proprietorship for several years,

but projected changes in her business's income have led her to consider incorporating. Kate is

married and has two children. Her family's only income, her annual salary of $$60,000,$ comes

from operating the business. $($The business actually earns more than $$60,000,$ but Kate reinvests

the additional earnings in the business.$)$ She itemizes deductions, and she is able to deduct

$$19,500.$ These deductions, combined with her four personal exemptions for $4**$$$3,950=$$$15,800,$

give her a personal taxable income of $$24,700=$$$60,000-$$$19,500-$$$15,800.$

Of course, her actual taxable income, if she does not incorporate, would be higher by the

amount of reinvested income. Kate estimates that her business earnings before salary and taxes

for the period $2016$ to $2018$ will be as follows:

a$.$ What would Brown's total taxes $($corporate plus personal$)$ be in each year under

$(1)$ A corporation? $(2016$ tax $=$$$7,297\mathrm{.}50$

$(2)$ A proprietorship? $(2016$ tax $=$$$7,297\mathrm{.}50$

b$.$ Should Brown incorporate? Discuss.