Taxation of various business forms Thomas is the sole owner of Bear Company, which makes custom blankets. In 2019, Bear's taxable income before any compensation to Thomas was $80,000. Bear also had $3

Taxation of various business forms

Thomas is the sole owner of Bear Company, which makes custom blankets. In 2019, Bear's taxable income before any compensation to Thomas was $80,000. Bear also had $30,000 of municipal bond interest. Thomas has significant income from other sources. Thomas is single and in the 24% marginal tax bracket. Determine the tax consequences to both Bear Company and Thomas under the following situations (ignore the 3.8% Medicare surtax on Net Investment Income):

Bear is a C corporation and pays no dividends or salary to Thomas.
Bear is a C corporation and distributes $50,000 of dividends to Thomas.
Bear is a C corporation and pays $50,000 salary to Thomas.
Bear is a sole proprietorship and Thomas withdrew $0.
Bear is a sole proprietorship and Thomas withdrew $50,000.

Write a letter to Thomas summarizing the tax effects of the various scenarios, including some tax planning recommendations. Include an explanation of general concepts surrounding the calculation.

Submission Requirements

Be sure to discuss and reference concepts taken from the assigned textbook reading and relevant research.
Support your paper with at least 5 tax, scholarly, legislative, or court references (of which the textbook may be one).
Review the grading rubric to see how you will be graded for this assignment.

Your paper should be 6 pages in length not including Title and Reference (which must be included).

Include at least 5-7 scholarly references in addition to the course textbook.

Powers, K., Robinson, J.R. & Stomberg, B. (2016). How do CEO incentives affect corporate tax planning and financial reporting of income taxes? Review of Accounting Studies, 21(2), 672-710.

Tutaj, A. J. (2018). Choice of entity corner: choice of entity implications of the new tax act. Journal of Passthrough Entities, 21(2), 15-18.

Apple. (2018). Form 10-K 2017. Retrieved from http://files.shareholder.com/downloads/AAPL/6245718187x0x962680/D18FAEFF-460A-4168-993D-A60CBA8ED209/_10-K_2017_As-Filed_.pdf

Charitable, etc., contributions and gifts, 26 U.S. Code & IRC Section 170 (n.d.). Retrieved from Thompson Reuters Checkpoint database.

Gregory v. Helvering. 13 aftr 806 69 F.2d 809 (2d Cir. 1934) Retrieved from Thompson Reuters Checkpoint database.

Internal Revenue Service. (9 February 2017a). Publication 538: Accounting periods and methods. Retrieved from https://www.irs.gov/pub/irs-pdf/p538.pdf

Internal Revenue Service. (2017b). Instructions for Form 2553, election by a small business corporation. Retrieved from https://www.irs.gov/pub/irs-pdf/i2553.pdf

Internal Revenue Service. (2018). Instructions for schedule M-3. Retrieved from https://www.irs.gov/pub/irs-pdf/i1120sm3.pdf

Internal Revenue Service. (2018a). LLC filing as a corporation or partnership. Retrieved from: https://www.irs.gov/businesses/small-businesses-self-employed/llc-filing-as-a-corporation-or-partnership

Internal Revenue Service. (2018b). Limited liability company-possible repercussions. Retrieved from: https://www.irs.gov/businesses/small-businesses-self-employed/limited-liability-company-possible-repercussions

Tax Cuts and Jobs Act of 2017, Pub. L. 115-97. (2017) Retrieved from https://www.congress.gov/115/bills/hr1/BILLS-115hr1enr.pdf