Carol recently incorporated her sole proprietorship and is considering making an S election. The corporation generates $200,000 of gross revenue and incurs expenses of $75,000, before paying Carol's salary. She plans to take a gross salary of $60,000 from the business, and this will be her only income for the year.
Task:
Compare the total tax burden for Carol and the corporation with and without the S election. Consider both income and employment taxes. Carol is single and does not itemize her deductions. She plans to reinvest the corporation's net income after taxes into the business.