Beige Company has approximately $400,000 in net income in 2008 before deducting any compensation or other payment to its sole owner, Janet (who is single). Assume that Janet is in the 35% marginal tax bracket. Discuss the tax aspects of each of the following arrangements:
a. Janet operates Beige Company as a proprietorship.
b. Janet incorporates Beige Company and pays herself a salary of $100,000 and no dividend.
c. Janet incorporates the company and pays herself a $100,000 salary and a dividend of $199,750 ($300,000 - $100,250 corporate income tax).
d. Janet incorporates the company and pays herself a salary of $400,000.