Samantha Johnson owns Skylark Bakery. Currently, the bakery is operated as a sole proprietorship and generates an annual operating profit of $100,000. In addition, the bakery earns annual dividends of $5,000 from investing excess working capital in the stock of publicly traded corporations. These stock investments typically are held for a minimum of three to four months before funds are required for the business. As a result of income from other business ventures and investments, Samantha is in the 35% marginal tax rate bracket irrespective of the bakery. In the past, Samantha has withdrawn $50,000 annually from the bakery, which she regards as reasonable payment for her services. Samantha has asked you about the tax consequences of conducting the business as a regular (C) corporation based on the given information, what would be the annual income tax savings (or cost) of operating the bakery as a corporation? For purpose of this analysis, use the 201 tax rates and ignore any employment tax or state tax considerations. EXAMPLE 1: Samantha, the sole proprietor of Skylark Bakery, reports the $100,000 net profit (ordinary income) from the business on Schedule C of her individual tax return. Even though she withdrew only $50,000, Samantha reports all of the $100,000 net profit from the business on form 1040, where she computes taxable income for the year. She also reports dividend income of $5,000 on Schedule B of Form 1040