Solution-Determine the tax consequences for Turtle and

Determine the tax consequences for Turtle and Britney

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Reference no: EM132657632

Problem - Turtle, a C corporation, has taxable income of $300,000 before paying salaries to the three equal shareholder-employees, Britney, Shania, and Alan. Turtle follows a policy of distributing all after-tax earnings to the shareholders.

a. Determine the tax consequences for Turtle, Britney, Shania, and Alan if the corporation pays salaries to Britney, Shania, and Alan as follows.

Option 1		Option 2
Britney	$135,000	Britney	$67,500
Shania	90,000	Shania	45,000
Alan	75,000	Alan	37,500

b. Is Turtle likely to encounter any Federal income tax problems associated with either option? Explain.

Reference no: EM132657632

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Determine the tax consequences for Turtle and Britney

Reference no: EM132657632

Reference no: EM132657632

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