Jack Flubber, who owns Sons of Flubber Construction Co.,and runs it as a proprietorship, had gross profits last year of$80,000. His personal and family expenses are $52,000 andhe has $7,000 in exemptions and deductions. He paid$17,000 in taxes. If he paid himself a salary of $55,000taxed at 20%, would it be advantageous for him to incorporateas a closely held corporation? Explain.
Jack Flubber, who owns Sons of Flubber Construction Co.,and runs it as a proprietorship, had gross profits last year of$80,000. His personal and family expenses are $52,000 andhe has $7,000 in exemptions and deductions. He paid$17,000 in taxes. If he paid himself a salary of $55,000taxed at 20%, would it be advantageous for him to incorporateas a closely held corporation? Explain.
Chapter11: Investor Losses
Section: Chapter Questions
Problem 46P
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Question
Jack Flubber, who owns Sons of Flubber Construction Co.,
and runs it as a proprietorship, had gross profits last year of
$80,000. His personal and family expenses are $52,000 and
he has $7,000 in exemptions and deductions. He paid
$17,000 in taxes. If he paid himself a salary of $55,000
taxed at 20%, would it be advantageous for him to incorporate
as a closely held corporation? Explain.
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