Lenny is the sole shareholder of an S corporation. Each year, he draws a salary and receives a distribution of profits from the corporation. Which of the following statements is TRUE? Lenny's share of the profits will not besubject to social security or medicare taxes. Lenny's salary will be treated as self-employment income and must be reported on Schedule C. Lenny will pay income taxes only on the portion of the profits that he actuallydistributes to himself. Lenny may determine his salary by selecting the amount that provides him the greatest tax benefit, regardless of the market rate for the services he provides.

S Corporation -An S corp is a type of business structure that allows for pass-through to…

Answered: Lenny is the sole shareholder of an S…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Clarence is an employee at the Drake Candy Corporation, an S corporation. Clarence and other employees are covered under a disability income plan that will pay him 50% of his $96,000 salary if he becomes disabled. The company adds the pro rata cost of the plan to each employee's W-2. Clarence is in the 25% income tax bracket. What is the amount of monthly disability benefits Clarence will receive after tax if he remains in the same tax bracket when disabled? 1. $2,250. 2. $3,000. 3. $3,500. 4. $4,000. Ⓒ$4,000. $3,500. $2,250. Ⓒ$3,000.
A married taxpayer files a separate tax return from his wife and does not participate in an employer-sponsored retirement plan at work. The taxpayer has moved out of the couples' home, but lived with his spouse part of the year. The taxpayer cannot deduct any contributions he makes to his traditional IRA if his modified AGI exceeds $_______________?
Abel's employer provides Abel with a group life insurance benefit. Abel irrevocably transferred the group life insurance policy and all of the attendant incidents of ownership to his brother, Cain. Cain changed the beneficiary on the policy to himself. The $50,000 policy was paid to Cain upon Abel's death. How much is includible in Abel's gross estate?
n each of the following cases, discuss how the taxpayers might respond to a tax rate increase in a manner consistent with the income effect. a. Mr. Edwards earns $32,000 a year as an employee, and Mrs. Edwards doesn’t work.b. Mr. Frank earns $22,000 a year as an employee, and Mrs. Frank earns $10,000 a year as a self-employed worker.c. Mr. George earns $22,000 a year as an employee, and Mrs. George earns $10,000 a year as an employee.
This answer is wrong . please give me the right answer.
Gina owns all of Cherry Corporation's stock. Cherry pays her a $74,000 salary, which reduces its before-tax profit to $21,000. Cherry distributes all of its after-tax income to its shareholder, Gina. Gina is married, and her spouse receives $82,000 of salary from an unrelated employer. They file jointly, have $31,500 of itemized deductions, and have no dependents. Compute the total income tax that is paid. Ignore payroll taxes. (The tax year is 2022) View the standard deduction amounts. View the 2022 tax rate schedule for the Married filing jointly filing status. Read the requirement. a. Compute the total income tax that would be paid assuming Cherry is an S corporation. Ignore payroll taxes. Begin by calculating taxable income for Gina under this scenario. S corporation income Salaries Adjusted gross income Minus: 74,000 82,000 156,000 Qualified business income deduction Itemized deductions Taxable income 0 31,500 124,500 Now enter the income tax that would be paid by Gina and the…
Doug and Tammy are not related and do not live together. Doug is employed and earns commission income. Tammy is an independent broker and earns commission income. Both maintain an office in their homes. Which of the following statements is false regarding the tax treatment of their incomes for 2020? (a) Tammy can incur a non-capital loss, but Doug cannot. (b) Tammy and Doug can deduct a portion of their property tax and house insurance (c) Tammy can deduct a portion of her home mortgage interest, but Doug cannot. (d) Tammy and Doug can claim CCA on their computers.
Rodrigo works as a self-employed salesperson. His job requires that he spend most of his time outside the office calling on customers. In addition, to supplement his income, he works 1 night a week and on weekends as a waiter at an exclusive seafood restaurant in the city. During the year, he keeps the following record of his travel: Miles Home to office 850 Office to home 425 Office to restaurant 300 Restaurant to home 1,200 Home to restaurant 725 Office to custormers' office 7,100 Customers' office to restaurant 400 Total miles 11,000 If he uses the standard mileage rate, what amount can she deduct as a business automobile expense? Oa. S4255.00 Ob. $431250 Oc. S4,082 50 Od. $5,175.00 Oe, S4,485.00
in 2023 (for 2022 tax returns filed in 2023), Taxpayer X and Taxpayer Y each agree to pay their tax preparer, Randy, from the refund they receive from the IRS. Upon presenting their refund checks to Randy, Randy pays them the difference in cash. Randy then endorses both checks and deposits them into his account. Randy has a Power of Attorney for Taxpayer X, but no Power of Attorney for Taxpayer Y. A. Randy is subject to a penalty of $110 B. Randy is subject to a penalty of $55 C. Randy is a subject to a penalty of $560 D. Randy is a subject to a penalty of $1,120
In 2023, Jack, age 12, has interest income of $6,540 on funds he inherited from his aunt and no earned income. He has no investment expenses. Christian and Danielle (his parents) have taxable income of $88,150 and file a joint return. Assume that no parental election is made. Click here to access the 2023 tax rate schedule. If required, round the tax computations to the nearest dollar. Jack's net unearned income is Jack's allocable parental tax is Jack's total tax is 2,200 X 264 X. 264 X.
Ekiya, who is single, has been offered a position as a city landscape consultant. The position pays $127,400 in wages. Assume Ekiya has no dependents. Ekiya deducts the standard deduction instead of itemized deductions, she is not eligible for the qualified business income deduction, and she did not make any charitable donations. -what is the amount of Ekiya’s after-tax compensation (ignore payroll taxes)? -suppose Ekiya receives a competing job offer of $122,000 in wages and non taxable (excluded) benefits worth $5,400. What is the amount of Ekiyas after tax compensation for the competing offer?

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