Turtle, a C corporation, has taxable income of $300,000 before paying salaries to the three...
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Turtle, a C corporation, has taxable income of $300,000 before paying salaries to the three equal shareholder-employees, Britney, Shania, and Alan. Turtle follows a policy of distributing all after-tax earnings to the shareholders. Determine the tax consequences for Turtle, Britney, Shania, and Alan if the corporation pays salaries to Britney, Shania, and Alan as follows. Option 1 Option 2 Britney $135,000 Britney $67,500 Shania 90,000 Shania 45,000 Alan 75,000 Alan 37,500 If an amount is zero, enter "O". a. Under Option 1: Turtle's taxable income will be $ 0 V. Britney will include $ 135,000 in her gross income, Shania will include 90,000 in her gross income, and Alan will include $ 75,000 in his gross income. Under Option 2: Turtle's taxable income will be s 150,000. Britney will include $ 45,000 X in her gross income, Shania will include 45,000 X in her gross income, and Alan will include $ 45,000 X in his gross income. Feedback b. Is Turtle likely to encounter any Federal income tax problems associated with either option? With Option 1
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