They organized the business as a C corporation, KT, Inc. During 2021, the corporation was successful and generated revenues of $2.5 million. KT had operating expenses of $730,000 before any payments to Kirk or Tanner. During 2021, KT paid dividends to Kirk and Tanner in the amount of $240,000 each. Assume that Kirk's wife earned $140,000 from her job, they file a joint return, have itemized deductions of $32,000, and have no children.

Married, Filing Joint and Surviving Spouse

If taxable income is:	The tax is:
Not over $19,900. . . . . . . . . . . . . . . . . . . . .	10% of taxable income.
Over $19,900 but not over $81,050. . . . . .	$1,990.00 + 12% of the excess over $19,900.
Over $81,050 but not over $172,750. . . . .	$9,328.00 + 22% of the excess over $81,050.
Over $172,750 but not over $329,850. . . .	$29,502.00 + 24% of the excess over $172,750.
Over $329,850 but not over $418,850. . . .	$67,206.00 + 32% of the excess over $329,850.
Over $418,850 but not over $628,300. . . .	$95,686.00 + 35% of the excess over $418,850.
Over $628,300. . . . . . . . . . . . . . . . . . . . . . . .	$168,993.50 + 37% of the excess over $628,300.

Personal and Dependency Exemptions Suspended: In conjunction with the increased standard deduction amount, the Tax Cuts and Jobs Act reduces the personal exemption amount to $0 for tax years from 2018 through 2025, effectively suspending the exemptions for these years.

A corporation's taxable income is subject to a flat tax rate of 21%.

Filing Status

Married individuals filing joint returns and surviving spouses

$25,100

Heads of households

$18,800

Unmarried individuals (other than surviving spouses and heads of households)

$12,550

Married individuals filing separate returns

$12,550

Additional standard deduction for the aged and the blind; Individual who is married and surviving spouses

$1,350*

Additional standard deduction for the aged and the blind; Individual who is unmarried and not a surviving spouse

$1,700*

Taxpayer claimed as dependent on another taxpayers return: Greater of (1) earned income plus $350 or (2) $1,100.

* These amounts are $2,700 and $3,400, respectively, for a taxpayer who is both aged and blind.

Requirement a. Compute the total tax liability of KT, Inc. and

Kirk

and his wife for

2021.

Ignore the net investment income tax. (Enter amounts in dollars and not in millions. If an input field is not used in the table, leave the input field empty; do not select a label or enter a zero. Do not round intermediary calculations. Only round the amounts you enter in the input fields to the nearest cent. Use the tax rate schedule for necessary tax calculations.)

Begin by calculating the tax liability for KT, Inc.

Minus:
Taxable income
Corporate tax

Part 2

Compute the tax liability of

Kirk

and his wife.

Adjusted gross income (AGI)
Minus:	Deductions from AGI:
Taxable income

Part 3

Tax on taxable income without dividends (tax rate schedule)
Tax on dividends
Total tax (Individual)

Part 4

Requirement b. Instead of organizing the consulting business as a C corporation, assume

Kirk

and

Tanner

organized the business as a limited liability company, KT, LLC. KT made a distribution of

$240,000

each to

Kirk

and

Tanner

during

2021.

Compute the total tax liability of KT, LLC and

Kirk

for

2021.

Ignore any additional tax on net investment income, and ignore the qualified business income deduction. (Enter amounts in dollars and not in millions. If an input field is not used in the table, leave the input field empty; do not select a label or enter a zero. Do not round intermediary calculations. Only round the amounts you enter in the input fields to the nearest cent. Use the tax rate schedule for necessary tax calculations. Enter a "0" for items with a zero balance.)

Begin by calculating the tax liability for KT, LLC.

Minus:
Taxable income
Corporate tax

Part 5

Compute the tax liability of

Kirk

for

2021.

Adjusted gross income (AGI)
Minus:	Deductions from AGI:
Taxable income

Part 6

Tax on taxable income without dividends (tax rate schedule)
Tax on dividends
Total tax (Individual)