You are a new tax staff accountant at a local CPA firm. Duringyour first week on the job a client, Ms. Macchiato, came into thefirm seeking tax advice. In particular, Ms. Macchiato owns a smallcoffee shop, called the No Doze Café. Ms. Macchiato currentlyoperates the No Doze Café as a sole proprietorship but isconsidering incorporating the business as an S corporation. Ms.Macchiato works full-time in the business; if she converts thebusiness to an S corporation, she will pay herself a reasonablesalary equal to 30% of No Doze Café’s annual income. Ms. Macchiatohas hired your firm to prepare an analysis of the tax implicationsof converting No Doze Café from a sole proprietorship to an Scorporation at varying levels of projected business income. Yourmanager has asked you to construct an Excel spreadsheet that willallow you to compare the total federal income tax andpayroll/self-employment tax liability due when operating a businessas a sole proprietorship as opposed to an S corporation. Use thisspreadsheet to calculate the tax consequences to Ms. Macchiato ofincorporating No Doze Café as an S corporation, assuming thebusiness alternatively earns annual taxable income of $75,000,$150,000, $225,000, or $300,000 (before considering any salarypayments to Ms. Macchiato and associated payroll tax expenses).Importantly, your spreadsheet should produce the “correct answer”simply by entering a particular level of business income. That is,the formulas in your spreadsheet must be flexible enough toaccommodate the different tax provisions that apply at varyingincome levels without editing any cells besides the income itself.Use 2019 tax rates and taw law, including the Qualified BusinessIncome deduction, in your analysis (you may ignore the QBIdeduction wage and asset limitations but not the incomelimitation). Be sure that your analysis incorporatesself-employment and payroll taxes, not just federal income taxes.You may ignore any state tax implications. Ms. Macchiato is marriedand files jointly with her spouse. Neither Ms. Macchiato nor herspouse has any other sources of income or deduction besides No DozeCafé and their applicable standard deduction. The couple does nothave children or other dependents.