PLEASE SOLVE BOTH A AND B OF PROBLEM. USE TAX SHEET PROVIDED
Orie and Jane, husband and wife, operate a sole proprietorship. They expect their taxable
income next year to be $ of which $ is attributed to the sole
proprietorship. Orie and Jane are contemplating incorporating their sole proprietorship.
Use the tax rate schedule.
Required:
a Using the marriedjoint tax brackets and the corporate tax rate, find out how much
current tax this strategy could save Orie and Jane.
b After considering your answer to part A if they proceed with the new strategy, how much
income should be shifted to the corporation? Tax Rate Schedules
Individuals
Schedule XSingle
Schedule YMarried Filing Jointly or Qualifying surviving spouse
Schedule ZHead of Household
Schedule YMarried Filing Separately
