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QUESTION
Xie, who is in the 37 percent tax bracket, is the sole shareholder and president of Xenon. The corporation's financial records show the following:
Ms. Xie, who is in the 37 percent tax bracket, is the sole shareholder and president of Xenon. The corporation's financial records show the following:
Gross income from sales of goods$1,632,000
Operating expenses (944,000)
Salary paid to Ms. Xie (314,000)
Dividend distributions (214,000)
- Compute the combined tax cost for Xenon and Ms. Xie. (Ignore payroll tax.)
- How would your computation change if Ms. Xie's salary was $528,000 and Xenon paid no dividends?
