a. Compute the total income tax that would be paid assuming Cherry is an S corporation. Ignore payroll taxes Begin by calculating taxable income for Gina under this scenario. S corporation income Salaries 74,000 82,000 156,000 Adjusted gross income Minus: Qualified business income deduction Itemized deductions Taxable income 0 31,500 124,500 Now enter the income tax that would be paid by Gina and the corporation under this scenario, and compute the total income tax. (Use the 2022 tax rate schedules for all tax calculations. Enter a "0" if no tax is due. Do not round any intermediary calculations. Round your final tax liability to the nearest whole dollar.) Income tax paid by Gina Corporation Amount of tax 18,624 0 Total income tax 18,624
a. Compute the total income tax that would be paid assuming Cherry is an S corporation. Ignore payroll taxes Begin by calculating taxable income for Gina under this scenario. S corporation income Salaries 74,000 82,000 156,000 Adjusted gross income Minus: Qualified business income deduction Itemized deductions Taxable income 0 31,500 124,500 Now enter the income tax that would be paid by Gina and the corporation under this scenario, and compute the total income tax. (Use the 2022 tax rate schedules for all tax calculations. Enter a "0" if no tax is due. Do not round any intermediary calculations. Round your final tax liability to the nearest whole dollar.) Income tax paid by Gina Corporation Amount of tax 18,624 0 Total income tax 18,624
Chapter5: Introduction To Business Expenses
Section: Chapter Questions
Problem 30P
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Question
Transcribed Image Text:Gina owns all of Cherry Corporation's stock. Cherry pays her a $74,000 salary, which reduces its before-tax profit to $21,000. Cherry distributes all of its after-tax income to its shareholder, Gina. Gina
is married, and her spouse receives $82,000 of salary from an unrelated employer. They file jointly, have $31,500 of itemized deductions, and have no dependents. Compute the total income tax that is paid.
Ignore payroll taxes. (The tax year is 2022)
View the standard deduction amounts. View the 2022 tax rate schedule for the Married filing jointly filing status.
Read the requirement.
a. Compute the total income tax that would be paid assuming Cherry is an S corporation. Ignore payroll taxes.
Begin by calculating taxable income for Gina under this scenario.
S corporation income
Salaries
Adjusted gross income
Minus:
74,000
82,000
156,000
Qualified business income deduction
Itemized deductions
Taxable income
0
31,500
124,500
Now enter the income tax that would be paid by Gina and the corporation under this scenario, and compute the total income tax. (Use the 2022 tax rate schedules for all tax calculations. Enter a "0" if no tax is
due. Do not round any intermediary calculations. Round your final tax liability to the nearest whole dollar.)
Income tax paid by
Gina
Corporation
Total income tax
Amount of tax
18,624
0
18,624
Next compute the total income tax that would be paid assuming the additional facts under scenario (b). Ignore payroll taxes.
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