Tina owns and operates Timely Turn Tables (TTT) as a sole proprietorship. TTT’s taxable income…

Tina owns and operates Timely Turn Tables (TTT) as a sole
proprietorship. TTT’s taxable income during the current year is $80,000. In
addition to the TTT income, Tina has the following income and expenses during
the current year:

Interest income                                $11,000

Royalty income                         &
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Tina owns and operates Timely Turn Tables (TTT) as a sole
proprietorship. TTT’s taxable income during the current year is $80,000. In
addition to the TTT income, Tina has the following income and expenses during
the current year:

Interest income                                $11,000

Royalty income                                                 28,000

Deductions for AGI                         2,500

Deductions from AGI                     12,000

a. What is Tina’s current year taxable income and income tax
liability?

b. Tina would like to lower her tax by incorporating Timely
Turn Tables. How much income tax will she save if she incorporates TTT and pays
herself a salary of $40,000?

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