Fica and income taxes consequences

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Please answer the following question step by step and with detailed explanations. DO NOT COPY from the other instance of this question on Transtutors because its INCORRECT. Please be original and correct in the solutions

Miguel owns 100% Security Inc. which an extremely profitable C-Corporation providing security services to clients.

Security Inc. has been in business for the past eight years and has not paid any dividends. Miguel's salary for the most current year is $600,000. Miguel has no other income, is single, and has an ordinary marginal rate of 39.6%. Security Inc. has a marginal rate of 35%.

During a review by the IRS, the agent discovered that other similar businesses pay a wage of $250,000 of comparable services provided by Miguel.

Assume the IRS reclassifies $350,000 as unreasonable compensation. What are the FICA and income taxes consequences of the reclassification to both Miguel and Security Inc.? Please show your work and explain your calculations. (Hint: Do not forget Net Investment Income Tax and Additional Medicare Tax). Please show your work and explain your calculations.

Reference no: EM131812618

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