The Blue Corporation, a C corporation, is owned 100% by Nick Dent and had taxable income in 2022 of $530,000. Nick is also an employee of the corporation. In December 2022, the corporation has decided to distribute $440,000 to Nick and has asked you whether it would be better to distribute the money as a dividend or salary. Nick, a single taxpayer, is in the 37% marginal tax bracket. How would you respond to Blue Corporation? Consider only income taxes for this problem, and ignore the net investment income tax. (Nick's taxable income exceeds $459.750.) Vew the capital gain rafes for 2022. Calculate the taxes for Blue and Nick under each option. (For the purpose of this analysis, we will only consider the marginal and capital gain rates for Nick. Ignore the net investment income tax.) Capital Gains Rates Capital Gains and Dividends Capital gains and losses are assigned to baskets. Five possible tax rates will apply to most capital gains and losses: - Ordinary income tax rates (up to 37% in 2022) for gains on assets held one year or less - 28% rate on collectibles gains and includible Sec. 1202 gains - 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 as shown in the following table: The corresponding amounts if married filing separately are haif of the amounts for fliing jointly. The preferential rate is zero for taxable come up to $41,675 if married filing separatoly