Mr and Ms Soon are the sole shareholders of SW Incorporated. For the last three years, SW has employed their child as a sales representative, paying a $ annual salary. During a recent IRS audit, the revenue agent discovered that the child has never made a sale and spends the majority of time playing saxophone in a jazz band.
Required:
Determine the potential effect of this discovery on SWs taxable income and on the Soons' taxable income under the following assumptions:
a SW Incorporated is an S corporation.
b SW Incorporated is a C corporation.
Complete this question by entering your answers in the tabs below.
Required B
Determine the potential effect of this discovery on SWs taxable income and on the Soons' taxable income assuming SW Incorporated is an corporation.
tableSW Incorporated taxable income,,AmountMr and Mrs Soons taxable income,,
Reguired A
