Daniel, Who Is Single, Estimates That the Profits of His

question 95

True/False

Daniel, who is single, estimates that the profits of his business for the current tax year will be $100,000. Since the highest tax rate (34%) applicable to corporate taxable income of $100,000 is greater than the highest tax rate (28%) applicable to individual taxable income of $100,000, the Federal income tax liability will be less if Daniel conducts his business as a sole proprietorship rather than as a C corporation.

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Definitions:

Full-Time Employees

Workers who are employed for the full number of hours defined as standard by their employer, often receiving full employment benefits.

Financial Year

A financial year is a 12-month period used for calculating annual financial statements in businesses and other organizations.

Capital

Financial assets or resources that individuals or companies use to fund their operations and invest in their growth.

Tax Deduction

An expense that can be subtracted from gross income to reduce the taxable income, resulting in lower taxes owed.