24. LO.5 Turtle, a C corporation, reports taxable income of $200,000 before paying salaries to the two equal shareholder-employees, Britney and Alan. Turtle follows a policy of distributing all after-tax earnings to the shareholders.

a. Determine the tax consequences for Turtle, Britney, and Alan if the corporation pays salaries as follows. Britney and Alan have no other sources of income.

Option 1 Option 2 Britney $50,000 Britney $100,000 Alan 50,000 Alan 100,000

b. Which option would you recommend? Explain.