a.
Compute M’s after-tax cash flow from the entity’s business income and other forms of compensations if M conducted Mac561 as a single member LLC.
b.
Compute M’s after-tax cash flow from the entity’s business income and other forms of compensations if M received a salary of $100,000. Assume all the business income was allocated and distributed to M.
c.
Compute M’s after-tax cash flow from the entity’s business income and other forms of compensations if M received a salary of $20,000. Assume all the business income was allocated and distributed to M.
d.
Determine the compensation combination that generated the most after-cash flow for M. State the contributing factors that favoured this combination.
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Chapter 15 Solutions
MCGRAW-HILL'S TAX.OF INDIV.+BUS.2020
- Sheila, a single taxpayer, is a retired computer executive with a taxable income of 100,000 in the current year. She receives 30,000 per year in tax-exempt municipal bond interest. Adam and Tanya are married and have no children. Adam and Tanyas 100,000 taxable income is comprised solely of wages they earn from their jobs. Calculate and compare the amount of tax Sheila pays with Adam and Tanyas tax. How well does the ability-to-pay concept work in this situation?arrow_forwardBonnie is married and has one child. She owns Bonnies Rib Joint, which produces a taxable income of approximately 120,000 per year. a. Assume that Bonnies taxable income is 40,000 without considering the income from the rib joint. How much tax will she pay on the 120,000 of income from the rib joint? b. You work for the firm that prepares Bonnies tax return. Bonnie has asked the partner for whom you work to advise her on how she might lower her taxes. The partner has assigned you this task. Draft a memorandum to the partner that contains at least two options Bonnie could use to lower her taxes. For each option, explain the calculations that support the tax savings from your recommendation.arrow_forward
