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Problem: Module 9 Textbook Problem 8 Learning Objectives: - 9.4 Explain tax and nontax considerations in choosing a passthrough entity form - 9.6 Explain why individuals once again con use corporations as tax shelters Mr. Lion, who is in the 37 percent tax bracket, is the sole shareholder of Toto inc., which manufactures greeting cards. Toto's averege annual net profit (before deduction of Mr Lion's salary) is $280,000. For each of the following cases, compute the income tax barden on this profit. Assume that all dividends are taxed to individuals at a 20% tax rate. (lignore ariy payroli tax consequences.) Required: a. Toto is a C Corporation subject to a 21% tax rate. Mr. Lion's salary is $100,000, and Toto pays no dividends b. Toto is a C Corporation subject to a 21% tax rate. Mr. Lion's salary is $100,000, and Toto distributes its after-tax income as a dividend. c. Toto is an $ corporation. Mr. Lion's salary is $100,000, and Toto makes no cash distributions. Assume Toto's ordinary income qualifies for the 20 percent QBt deduction, subject to no limitations d. Toto is an 5 corporation. Mr. Lion draws no salary, and Toto makes no casti distributions. Assume Ioto's ordinary income qualifies for the 20 percent QB1 deduction, subject to no limitations. e. Toto is an 5 corporation. Mr. Lion draws no salary, and Toto makes cash distributions of ail its income to Mr. Lion Assume Toto's ordinary income qualifies for the 20 percent Q ai deduction, subject to no timitations

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