Jayzee Is a Single Taxpayer Who Operates a Sole Proprietorship

question 14

Essay

Jayzee is a single taxpayer who operates a sole proprietorship.He expects his taxable income next year to be $150,000, of which $125,000 is attributed to his sole proprietorship.Jayzee is contemplating incorporating his sole proprietorship.Using the 2019 single individual tax brackets and the corporate tax brackets, how much current tax could this strategy save Jayzee? (Ignore any Social Security, Medicare, or self-employment tax issues.)How much income should be retained in the corporation? (Use tax rate schedule)

---

Definitions:

Cost Management

The process of planning and controlling the budget of a business or project, focusing on reducing costs and maximizing value.

Cost Savings

The reduction in expenses achieved through efficient management, negotiation, process improvements, or other means, contributing to increased profitability.

Cost Reductions

Efforts made to lower operating expenses and production costs without compromising quality or performance.

Cost Avoidance

Involves actions taken to prevent or reduce potential increases in costs, helping to control future expenses without necessarily resulting in immediate savings.