Assignment:
Suppose Congress is expected to increase the corporate tax rate from 35% to 45% next year. RealNet. Com is scheduled to pay its CEO a salary of $1 million in the current period. The CEO’s tax rate is 40%. The CEO is also entitled to a bonus that is up to the discretion of the compensation committee. As an adviser to the compensation committee, compare and contrast the following tax-planning strategies
a. Do nothing.
b. Defer a large part of the salary ($300,000) from the current period to the next period.
c. Defer the bonus from the current period to the next period.
Provide complete and step by step solution for the question and show calculations and use formulas.