Tawana owns and operates a sole proprietorship and has a 37 percent marginal tax rate. She provides her son, Jonathon, $10,000 a year for college expenses. Jonathon works as a pizza delivery person every fall and has a marginal tax rate of 15 percent.

How much pretax income does it currently take Tawana to generate the $10,000 (after-taxes) given to Jonathon?

If Jonathon worked for his mothers sole proprietorship, what salary would she have to pay him to generate $10,000 after taxes (ignoring any Social Security, Medicare, or self-employment tax issues)?

How much money would the strategy save?