Amber Company has $400,000 in net income in 2012 before deducting any compensation or other payment to its sole owner, Alfredo. Assume that Alfredo is in the 35% marginal tax bracket. Discuss the tax aspects of each of the following independent arrangements. (Assume that any salaries are reasonable in amount and ignore any employment tax considerations.)
Definitions:
Aerial Perspective
A technique in art and photography that simulates depth by depicting distant objects as paler, less detailed, and usually bluer than nearer objects.
Kinetic Depth Effect
A visual phenomenon where the motion of an object reveals its three-dimensional structure.
Motion Parallax
A depth cue in which objects closer move faster across the visual field than objects that are further away, creating a sense of depth.
Movement Illusion
An optical illusion where a static image appears to be moving due to the cognitive effects of interacting color contrasts and shape position.
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