12. Deborah owns a site development business (sole proprietorship), which nets $215,000 in Year 1 and is expected to grow by $15,000/year in each of the next 5 years. Assume her exemptions and deductions are $23,000/year for all 6 years. Also, assume that Deborah has just purchased a 5-year class excavator for $120,000. The use the tax and MACRS depreciation tables attached. Deborah's Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 S230,000 $245,000 S260,000 $275,000 $290,000 Income $215,000 Deductions Depreciation Taxable Income Tax Paid 1. Calculate the Taxable income in Year I through 6, assuming the MACRS depreciation on the attached, and calculate her yearly taxes, assuming she is a single Taxpayer. 2. If Deborah incorporates the business, and pays herself a salary of S115,000 all 6 years, what would be the total tax payments for the corporation and Deborah? Corporation Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 $215,000 $230,000 $245,000 S260,000 $275,000 $290,000 Income Salary Depreciation Taxable Income Tax Paid Deborah's Salary Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 $115,000 $115,000 S115,000 S115,000 $115,000 $115,000 Salary Deductions Taxable Income Tax Paid 11 M A/P PY 0944 VF 10 Faeter Table - 16.00% FXP FIA TID 11216 TI 24 P/A 4334 2.670 10 42134 DO DO 2 BUSES G DO 04 0.9013 TAXI 43 PET WCB WELD WD IONU CD OXO TWO STEL 11 WS CLIST TES HCO ACID SEME 144 DEN 21 2767 7 ANS 10 1901 LUS 1.7 COFE 149 DOT U 9 10 11 19 0.5684 03 450 4 73631 7.30 1611 4.2010 4013 41 AH 2015 BS 136 TI EL 11416 24.375 2923 400 400 1592 1.IX teta 634502 9:41 R 300 2013 2013 20 2.6 0.10 2.1 04 8:00 2009 * TO CLIPS NO HO OFC 13 14 15 1 19 18 19 30 11 10.1054 4772 POSE 630 CE D LAS TER 21.01 2016 3563 289730 300ST 1700 16 10. 439 10.99 30.813 TONE LOW 150L 11 11 11 1. 2016 12-14 1201 1396 2012 SO B01 1516 23 34 ICO LE OST 1991 RI 87.9304 WEIM . 10. 110.17 1159733 . 14524 2008 17200 240 30 LAO THE 12.755 WWE UTC 20 30 M 43910 35 02 IND 150 3931 19.00 154 2 15 15.7509 16.16 16.01 ON 14 019 TERS COE ME E SOC TILSE Table A-1 Year 3., 5., 7., 10., 15., and 20-Year Property Half-Year Convention Depreciation rate for recovery period 5-your 10 year 15 year 30.30 20.00 140 10.00% 5.00% 44.45 32.00 2440 18.00 0.50 14.01 19.20 17:40 1440 3.56 12.40 11.52 7.10 8.00 your 750W 7210 6.677 5.713 8.00 0.00 7:37 0.56 6.56 0.50 623 5.00 5.00 5.91 5285 4.560 4.522 4.402 5.91 5.90 5.01 5.00 5.91 4.462 4401 4462 4.401 4462 4.461 4.42 4.461 4.462 4401 21 9 TABLE 6.2 Tax Table for Single Taxpayers, 2015 Taxable Income of Single Taxpayers From To 0 9.225 10% 9.226 37.450 $922.50 + 15% of amount over $9.225 37.451 90.750 $5,156.25 + 25% of amount over $37,450 90.751 189,300 $18,481.25 +28% of amount over $90,750 189,301 411.500 $46.075.25 + 33% of amount over $189,300 411,501 413.200 $119,401.25 + 35% of amount over $411,500 413,201 Above $119,996.25 + 39.6% of amount over $413,200 TABLE 64 Corporate Income Brackets and Tax Rates 2015 Taxable Income From To Under Thx 0 50,000 155 50,000 75.000 $7.500 + 25% of the amount over 50.000 75.000 100.000 $13.750 + 34% of the amount over 75.000 100,000 335.000 $22.250 39% of the amount over 100,000 335.000 10,000,000 $113.00 +34% of the amount over 335,000 10.000.000 15.000.000 $3,400,000 + 35% of the amount over 10,000,000 15,000,000 18.333,333 $5,150,000+ 38% of the amount over 15,000,000 18,333,333 Above 354 12. Deborah owns a site development business (sole proprietorship), which nets $215,000 in Year 1 and is expected to grow by $15,000/year in each of the next 5 years. Assume her exemptions and deductions are $23,000/year for all 6 years. Also, assume that Deborah has just purchased a 5-year class excavator for $120,000. The use the tax and MACRS depreciation tables attached. Deborah's Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 S230,000 $245,000 S260,000 $275,000 $290,000 Income $215,000 Deductions Depreciation Taxable Income Tax Paid 1. Calculate the Taxable income in Year I through 6, assuming the MACRS depreciation on the attached, and calculate her yearly taxes, assuming she is a single Taxpayer. 2. If Deborah incorporates the business, and pays herself a salary of S115,000 all 6 years, what would be the total tax payments for the corporation and Deborah? Corporation Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 $215,000 $230,000 $245,000 S260,000 $275,000 $290,000 Income Salary Depreciation Taxable Income Tax Paid Deborah's Salary Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 $115,000 $115,000 S115,000 S115,000 $115,000 $115,000 Salary Deductions Taxable Income Tax Paid 11 M A/P PY 0944 VF 10 Faeter Table - 16.00% FXP FIA TID 11216 TI 24 P/A 4334 2.670 10 42134 DO DO 2 BUSES G DO 04 0.9013 TAXI 43 PET WCB WELD WD IONU CD OXO TWO STEL 11 WS CLIST TES HCO ACID SEME 144 DEN 21 2767 7 ANS 10 1901 LUS 1.7 COFE 149 DOT U 9 10 11 19 0.5684 03 450 4 73631 7.30 1611 4.2010 4013 41 AH 2015 BS 136 TI EL 11416 24.375 2923 400 400 1592 1.IX teta 634502 9:41 R 300 2013 2013 20 2.6 0.10 2.1 04 8:00 2009 * TO CLIPS NO HO OFC 13 14 15 1 19 18 19 30 11 10.1054 4772 POSE 630 CE D LAS TER 21.01 2016 3563 289730 300ST 1700 16 10. 439 10.99 30.813 TONE LOW 150L 11 11 11 1. 2016 12-14 1201 1396 2012 SO B01 1516 23 34 ICO LE OST 1991 RI 87.9304 WEIM . 10. 110.17 1159733 . 14524 2008 17200 240 30 LAO THE 12.755 WWE UTC 20 30 M 43910 35 02 IND 150 3931 19.00 154 2 15 15.7509 16.16 16.01 ON 14 019 TERS COE ME E SOC TILSE Table A-1 Year 3., 5., 7., 10., 15., and 20-Year Property Half-Year Convention Depreciation rate for recovery period 5-your 10 year 15 year 30.30 20.00 140 10.00% 5.00% 44.45 32.00 2440 18.00 0.50 14.01 19.20 17:40 1440 3.56 12.40 11.52 7.10 8.00 your 750W 7210 6.677 5.713 8.00 0.00 7:37 0.56 6.56 0.50 623 5.00 5.00 5.91 5285 4.560 4.522 4.402 5.91 5.90 5.01 5.00 5.91 4.462 4401 4462 4.401 4462 4.461 4.42 4.461 4.462 4401 21 9 TABLE 6.2 Tax Table for Single Taxpayers, 2015 Taxable Income of Single Taxpayers From To 0 9.225 10% 9.226 37.450 $922.50 + 15% of amount over $9.225 37.451 90.750 $5,156.25 + 25% of amount over $37,450 90.751 189,300 $18,481.25 +28% of amount over $90,750 189,301 411.500 $46.075.25 + 33% of amount over $189,300 411,501 413.200 $119,401.25 + 35% of amount over $411,500 413,201 Above $119,996.25 + 39.6% of amount over $413,200 TABLE 64 Corporate Income Brackets and Tax Rates 2015 Taxable Income From To Under Thx 0 50,000 155 50,000 75.000 $7.500 + 25% of the amount over 50.000 75.000 100.000 $13.750 + 34% of the amount over 75.000 100,000 335.000 $22.250 39% of the amount over 100,000 335.000 10,000,000 $113.00 +34% of the amount over 335,000 10.000.000 15.000.000 $3,400,000 + 35% of the amount over 10,000,000 15,000,000 18.333,333 $5,150,000+ 38% of the amount over 15,000,000 18,333,333 Above 354