In 2014,Craig and Kathy Koehler owned a small business which was held as a proprietorship in Kathy's name.They were thinking of incorporating if that would lower their total tax liability.The Koehlers expected the company to earn $100,000 before taxes next year.They planned to take out salaries of $45,000,and to reinvest the rest in the business.Their personal deductions total $8,150 and they will file a joint return for their personal income. (1)What is their expected total tax liability as a proprietorship? (2)As a corporation? (3)Based on current taxes,should they incorporate? A) $23,304.50;$14,675.00;Yes B) $14,675.00;$13,427.50;Yes C) $23,304.50;$13,427.50;Yes D) $15,212.50;$23,450.00;No E) $20,778.00;$23,450.00;No
In 2014,Craig and Kathy Koehler owned a small business which was held as a proprietorship in Kathy's name.They were thinking of incorporating if that would lower their total tax liability.The Koehlers expected the company to earn $100,000 before taxes next year.They planned to take out salaries of $45,000,and to reinvest the rest in the business.Their personal deductions total $8,150 and they will file a joint return for their personal income. (1)What is their expected total tax liability as a proprietorship? (2)As a corporation? (3)Based on current taxes,should they incorporate? A) $23,304.50;$14,675.00;Yes B) $14,675.00;$13,427.50;Yes C) $23,304.50;$13,427.50;Yes D) $15,212.50;$23,450.00;No E) $20,778.00;$23,450.00;No
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter12: Corporations: Organization, Capital Structure, And Operating Rules
Section: Chapter Questions
Problem 10P
Related questions
Question
100%
Transcribed Image Text:In 2014,Craig and Kathy Koehler owned a
small business which was held as a
proprietorship in Kathy's name.They were
thinking of incorporating if that would lower
their total tax liability.The Koehlers
expected the company to earn $100,000
before taxes next year.They planned to take
out salaries of $45,000,and to reinvest the
rest in the business.Their personal
deductions total $8,150 and they will file a
joint return for their personal income.
(1)What is their expected total tax liability as
a proprietorship?
(2)As a corporation?
(3)Based on current taxes,should they
incorporate?
A) $23,304.50;$14,675.00;Yes
B) $14,675.00;$13,427.50;Yes
C) $23,304.50;$13,427.50;Yes
D) $15,212.50;$23,450.00;No
E) $20,778.00;$23,450.00;No
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you