Calculate both as distributed as dividends and as salary

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Question - The Brick Corporation, a C corporation, is owned 100% by Ken Dent and had taxable income in 2018 of $ 510,000.

Ken is also an employee of the corporation. In December 2018, the corporation has decided to distribute $ 420,000 to

Ken and has asked you whether it would be better to distribute the money as a dividend or salary.

Ken a single taxpayer, is in the 37% marginal tax bracket. How would you respond to Brick Corporation? Consider only income taxes for this problem. (Ken's taxable income exceeds $ 425,800).

Required - Calculate both as distributed as dividends and as salary?

Reference no: EM132972870

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