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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.)
Adjustment
The process of adapting or becoming accustomed to new conditions or environments.
External Locus
A belief that one’s outcomes or circumstances are determined by external factors, events, or influences, as opposed to one's own effort or actions.
Self-esteem
A person's personal assessment of their own merit or importance.
Social Empathy
The ability to understand and relate to the experiences, thoughts, and emotions of individuals from different backgrounds and cultures.
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