Schedule Y-1-Married Filing Jointly or Qualifying Widow(er) If taxable income is over: But not over: $ 0 $ 20,550 $ 83,550 $ 178,150 $ 340,100 $431,900 $ 647,850 $ 20,550 $ 83,550 $ 178,150 $ 340,100 $ 431,900 $ 647,850 The tax is: 10% of taxable income $2,055 plus 12% of the excess over $20,550 $9,615 plus 22% of the excess over $83,550 $30,427 plus 24% of the excess over $178,150 $69,295 plus 32% of the excess over $340,100 $98,671 plus 35% of the excess over $431,900 $174,253.50 plus 37% of the excess over $647,850 Orie and Jane, husband and wife, operate a sole proprietorship. They expect their taxable income next year to be $450,000, of which $250,000 is attributed to the sole proprietorship. Orie and Jane are contemplating incorporating their sole proprietorship. (Use the tax rate schedule.) Required: a. Using the married-joint tax brackets and the corporate tax rate, find out how much current tax this strategy could save Orie and Jane. Note: Do not round your intermediate calculations. Round your final answer to the nearest whole dollar amount. Practice Problems: Chapter 3 b. How much income should be left in the corporation? Complete this question by entering your answers in the tabs below. Required A Required B Using the married-joint tax brackets and the corporate tax rate, find out how much current tax this and Jane. Note: Do not round your intermediate calculations. Round your final answer to the nearest whole dol Current tax saved
Schedule Y-1-Married Filing Jointly or Qualifying Widow(er) If taxable income is over: But not over: $ 0 $ 20,550 $ 83,550 $ 178,150 $ 340,100 $431,900 $ 647,850 $ 20,550 $ 83,550 $ 178,150 $ 340,100 $ 431,900 $ 647,850 The tax is: 10% of taxable income $2,055 plus 12% of the excess over $20,550 $9,615 plus 22% of the excess over $83,550 $30,427 plus 24% of the excess over $178,150 $69,295 plus 32% of the excess over $340,100 $98,671 plus 35% of the excess over $431,900 $174,253.50 plus 37% of the excess over $647,850 Orie and Jane, husband and wife, operate a sole proprietorship. They expect their taxable income next year to be $450,000, of which $250,000 is attributed to the sole proprietorship. Orie and Jane are contemplating incorporating their sole proprietorship. (Use the tax rate schedule.) Required: a. Using the married-joint tax brackets and the corporate tax rate, find out how much current tax this strategy could save Orie and Jane. Note: Do not round your intermediate calculations. Round your final answer to the nearest whole dollar amount. Practice Problems: Chapter 3 b. How much income should be left in the corporation? Complete this question by entering your answers in the tabs below. Required A Required B Using the married-joint tax brackets and the corporate tax rate, find out how much current tax this and Jane. Note: Do not round your intermediate calculations. Round your final answer to the nearest whole dol Current tax saved
Chapter13: Choice Of Business Entity—general Tax And Nontax Factors/formation
Section: Chapter Questions
Problem 75DC
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Transcribed Image Text:Schedule Y-1-Married Filing Jointly or Qualifying Widow(er)
If taxable income is over: But not over:
$
0
$ 20,550
$ 83,550
$ 178,150
$ 340,100
$431,900
$ 647,850
$ 20,550
$ 83,550
$ 178,150
$ 340,100
$ 431,900
$ 647,850
The tax is:
10% of taxable income
$2,055 plus 12% of the excess over $20,550
$9,615 plus 22% of the excess over $83,550
$30,427 plus 24% of the excess over $178,150
$69,295 plus 32% of the excess over $340,100
$98,671 plus 35% of the excess over $431,900
$174,253.50 plus 37% of the excess over $647,850
Transcribed Image Text:Orie and Jane, husband and wife, operate a sole proprietorship. They expect their taxable
income next year to be $450,000, of which $250,000 is attributed to the sole proprietorship.
Orie and Jane are contemplating incorporating their sole proprietorship. (Use the tax rate
schedule.)
Required:
a. Using the married-joint tax brackets and the corporate tax rate, find out how much current
tax this strategy could save Orie and Jane.
Note: Do not round your intermediate calculations. Round your final answer to the
nearest whole dollar amount.
Practice Problems: Chapter 3
b. How much income should be left in the corporation?
Complete this question by entering your answers in the tabs below.
Required A Required B
Using the married-joint tax brackets and the corporate tax rate, find out how much current tax this
and Jane.
Note: Do not round your intermediate calculations. Round your final answer to the nearest whole dol
Current tax saved
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