Beige Company has approximately $250,000 in net income in 2011 before deducting any compensation or other payment to its sole owner, Janet (who is single). Assume that Janet is in the 35% marginal tax bracket. Discuss the tax aspects of each of the following arrangements. (Ignore any employment tax considerations.)
Definitions:
Economic Goods
Items or services that have a price and are scarce in relation to their demand, thus necessitating economic decision-making.
Scarce Resources
Raw materials, labor, and capital that are limited in availability, requiring societies to make decisions on their allocation and use.
Unit-Costs
Expenses a firm faces for producing, holding, and marketing one unit of a given product or service.
Restricts Trade
Actions or policies implemented by governments or economic entities to limit or control the exchange of goods and services across borders.
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