Ck is starting a business that he expects to produce 60000

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Ck is starting a business that he expects to produce $60,000 of income this year before compensating Jack for his services. He has $1,000 of other income and itemized deductions totaling $10,000. He wants to know whether he should incorporate or operate the business as a proprietorship. If a corporation is formed, he wants to know whether he should make an S election. If he incorporates, the corporation will pay Jack a salary of $40,000. He expects to distribute an additional $5,000 of corporate profits to himself each year. Jack is single. Task: Which organizational form, proprietorship, S corporation, or C corporation, will produce the lowest total current income tax liability for Jack and his business? Ignore payroll and other taxes.

Reference no: EM13604072

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