YAXATION QUESTION

Crawford Corporation, a C Corp, is a manufacturer of wire hangers for the laundry and dry cleaning industry. This second generation family$-$owned business has prospered for many years. It was founded by the family matriarch Joan $($now deceased$)$ fifty years ago. The company was left equally to two of her children, Christopher and Christina. Christopher, age $50,$ runs the business. Although Christina, age $52$ wants nothing to do with wire hangers, she is not happy that she has historically been receiving small dividends from the company.

Little technological change has occurred in the manufacturing of hangers over the years. The advent of thin velvet$/$plastic hangers and improved fabrics has kept the overall market size constant and no major plant expansions or additions are planned. At this point, the business almost "runs itself". By merely doing the same things year to year, the business produces consistent profits $($before Christopher's salary and corporate taxes$)$ in the $$1,000,000$ range.

The company has had little tax planning or advice over the years. Christopher is concerned about the taxes the company has been paying. Christine has been complaining about the nominal dividends the company has been paying. When discussing the situation with his friends, they mentioned that they had $"$S$-$Corps". Christopher thinks that this may be a good idea for the company. You have been retained to review the situation.

A review of tax returns for the past three years indicates the following:

$\backslash$table$[[,\backslash$table$[[$FYE$],[\frac{6}{30}\frac{?}{22}$