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Question
In 2014, Craig and Kathy Koehler owned a small business which was held as a proprietorship in Kathy's name. They were thinking of incorporating if that would lower their total tax liability. The Koehlers expected the company to earn $100,000 before taxes next year. They planned to take out salaries of $45,000, and to reinvest the rest in the business. Their personal deductions total $8,150 and they will file a joint return for their personal income. (1) What is their expected total tax liability as a proprietorship? (2) As a corporation? (3) Based on current taxes, should they incorporate?
a. $23,304.50; $14,675.00; Yes
b. $14,675.00; $13,427.50; Yes
c. $23,304.50; $13,427.50; Yes
d. $15,212.50; $23,450.00; No
e. $20,778.00; $23,450.00; No
Answer
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