Mr and Mrs. Soon are the sole shareholders of SW Inc. For the last three...
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Accounting
Mr and Mrs. Soon are the sole shareholders of SW Inc. For the last three years, SW has employed their son as a sales representative and paid him a $30,000 annual salary. During a recent IRS audit, the revenue agent discovered that the son has never made a sale and spends most of his time playing saxophone in a jazz band. Determine the potential effect of this discovery on SW's taxable income and on Mr. and Mrs. Soon's taxable income under the following assumptions:
a. SW Inc is an S corporation.
b. SW Inc is a C corporation.
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