TYLER CORPORATION MAJOR SHAREHOLDER AND OFFICER RECEIVEDCOMPENSATION OF 500,000 THIS YEAR

FOR TAX PURPOSES THE COMPENSATION IS SALARY EXPENSE OF 350,000AND DIVIDENDS OF 150,000

FOR BOOK DETERMINATION THE 500,000 IS SALARY EXPENSE.

TYLER HAS BOOK INCOME BEFORE TAXES OF 2,000,000. TYLER TAXABLEINCOME ON SCHEDULE M1 FORM 1120 FOR THE YEAR

1650.000

2150.000

2350.000

2500.000

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Jarrod RobelLv2

17 Feb 2018

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ELDE CORPORATION IS IN THE BUSINESS OF SELLING USED CARS ONINSTALLMENT CONTRACTS.

THIS YEAR NET INCOME PER BOOK OF 500,000 BEFORE TAXES

GROSS PROFIT FROM INSTALLMENT SALES IS 300,000 FOR THE YEAR.

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For the current year, Maple Corporation, a C corporation,reports taxable income of $397,000 before paying salary to its soleshareholder, Diane. Dianeâs marginal tax rate on ordinary income is35.9 percent (including the additional Medicare tax) and 18.8percent on dividend income (including the 3.8% net investmentincome tax). If Maple pays Diane a salary of $222,000 but the IRSdetermines that Dianeâs salary in excess of $175,000 isunreasonable compensation, what is the amount of the overall tax(corporate level + shareholder level) on Mapleâs $397,000pre-salary income? Assume Mapleâs tax rate is 35 percent and itdistributes all after-tax earnings to Diane. (Round yourintermediate calculations and final answers to the nearest wholedollar amount.)