Several years ago, Brian formed Sign Corporation, a retail company that does not qualify for the U.S. production activities deduction Sigma uses the accrued method of accounting, In 2012, the corporation repo following items: Gross Profit: $290,000 Long-term Capital Gain: $20,000 Tax-exempt interest received: $7,000 Salary paid to Briare $80,000 Payroll tax on Briank's salary (Signal's Share): $6,000 Depreciation: $25,000 ($21,000 for E&P purposes) Other operating expenses: $89,000 Dividend distribution to Brare $60,000 In addition to owning 100%% of Sigma's sock, Brian manages Sigma's business and earns the $80,090 salary listed above. This salary is an ordinary and necessary business expense of the corporation and is reas amount. The payroll tax on Brian's $80,000 salary is $12,000; $6,000 of which Sigma parys and deducts, and the other $6,000 of which Brian pays through Social Security (FICA) withholding Brian is single will dependents and claims the standard deduction a. ) Calculate Sigma's and Brian's 2012 taxable income and total tax liability, as well as their combined tax lability. Also, calculate the corporation's current EXP after the dividend distribution. b. ) Assume instead that Brian operates Sigma as a sole propprictorship. In the current year, the business reports the same operation results as above, and Brian withdraws $140,000 in lieu of the salary and dividend Brian's self-employment tax is $17,000. Compute Brian's total tax lability for 2012. c.) Assume a C corporation such as in Part a distributes all of its after-tax earnings. Compare the tax treatment of long-term capital gains, tax-exempt interest, and operating profits if camed by a C corporation will treatment of these items if camed by a sole proprietorship Solution