Tina owns and operates Timely Turn Tables (TTT) as a sole proprietorship. TTT’s taxable income during the current year is $80,000. In addition to the TTT income, Tina has the following income and expenses during the current year:

Interest income .... $11,000

Royalty income ..... 28,000

Deductions for AGI ... 2,500

Deductions from AGI .. 12,000

a. What is Tina’s current year taxable income and income tax liability?

b. Tina would like to lower her tax by incorporating Timely Turn Tables. How much income tax will she save if she incorporates TTT and pays herself a salary of $40,000?