Sylvia owns 100% of Loyal Corporation's stock and also runs the company as its CEO. Loyal is a C corporation that expects to earn $420,000 before deducting any salary paid to Sylvia. Sylvia wants the corporation to pay her $310,000 for the current year in pre-tax dollars. She is considering three different options: (1) a $310,000 dividend, (2) a $155,000 dividend plus a $155,000 salary, or (3) a $310,000 salary. i (Click the icon to view additional information.) (Click the icon to view the tax rate schedules for 2020.) (Click the icon to view the standard deductions for 2020.) First, calculate the total tax liability (corporate and individual) for each of the three options. Start with option 1, then op Option 1: a $310,000 Option 2: a $155,000 dividend Option 3: a $310,000 dividend plus a $155,000 salary salary Corporation Individual Total tax Which option results in the lowest overall tax? More info Any dividends qualify for the preferential capital gains tax rates. Sylvia's husband has no earnings of his own in the current year, so her income is the sole source for the family. Sylvia and her husband file a joint tax return and claim the standard deduction for the current year. (Assume the current year is 2020.) Print Done Data table Married, Filing Joint and Surviving Spouse The tax is: If taxable income is: Not over $19,750 Over $19,750 but not over $80,250 Over $80,250 but not over $171,050 Over $171,050 but not over $326,600 Over $326,600 but not over $414,700 Over $414,700 but not over $622,050 Over $622,050 10% of taxable income $1,975.00+12% of the excess over $19,750 ..$9,235.00 +22% of the excess over $80,250 ... $29,211.00 +24% of the excess over $171,050 ....$66,543.00 +32% of the excess over $326,600 ... $94,735.00 + 35% of the excess over $414,700 . $167,307.50 + 37% of the excess over $622,050 Preferential tax rates for gains on assets held for more than one year and qualified dividends based on the taxpayer's taxable income and filing status Preferential Rate Single Filing Jointly* 0% Up to $40,000 Up to $80,000 15% > $40,000 but $441,450 20% Over $441,450 > $80,000 but $496,600 Over $496,600 Head of Household Up to $53,600 > $53,600 but $469,050 Over $469,050 * The corresponding amounts if married filing separately are half of the amounts for filing jointly. The preferential rate is zero for taxable income up to $40,000 if married filing separately