Bono Owns and Operates a Sole Proprietorship and Has a 32

question 43

Essay

Bono owns and operates a sole proprietorship and has a 32 percent marginal tax rate. He provides his son, Richie, $6,000 a year for college expenses. Richie works as a street musician and has a marginal tax rate of 15 percent. What could Bono do to reduce his family tax burden? How much pretax income does it currently take Bono to generate the $6,000 after taxes given to Richie? If Richie worked for his father's sole proprietorship, what salary would Bono have to pay him to generate $6,000 after taxes? (Ignore any Social Security, Medicare, or self-employment tax issues.)How much money would this strategy save?

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Definitions:

Base Class

The class from which other classes are derived, also known as a parent or super class.

Instance Variables

Variables declared within a class for which each instantiated object of the class has its own separate copy, or instance.

Encapsulation

A fundamental concept in OOP that restricts direct access to some of an object's components, typically through the use of access modifiers, to protect the integrity of the data.

GetClass Method

A method in Java that returns the runtime class of an object, used for reflection.