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Ms. Xie, who is in the 37 percent tax bracket, is the sole shareholder and...

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Accounting

Ms. Xie, who is in the 37 percent tax bracket, is the sole shareholder and president of Xenon. The corporations financial records show the following:

Gross income from sales of goods $ 1,605,000
Operating expenses (935,000)
Salary paid to Ms. Xie (305,000)
Dividend distributions (205,000)

Required:

  1. Compute the combined tax cost for Xenon and Ms. Xie. (Ignore payroll tax.)
  2. How would your computation change if Ms. Xies salary was $510,000 and Xenon paid no dividends?

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