What is the total tax burden on income

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1. Darden Corporation has taxable income of $420,000. It if distributes all of its after-tax income to its sole shareholder who is in the 35 percent marginal tax bracket, what is the total tax burden on this $420,000 of income?

2. Shelly runs a small business as a sole proprietorship. The business has average annual income of $60,000 and Shelly takes $30,000 out of the business for living expenses each year. If her marginal tax rate is 25 percent due to other income, what is the net income tax effect if she incorporates her business and takes the $30,000 as salary? (Ignore employment taxes.)

Reference no: EM132078358

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