Beige Company has approximately $250,000 in net income in 2010 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:
Damages
Monetary compensation awarded by a court to a person who has suffered loss or harm due to the wrongful act of another.
Expenses Incurred
Costs that have been recognized or are payable due to business activities or transactions.
Breach Of Contract
The violation of any of the agreed-upon terms and conditions of a binding contract.
Special Damages
Compensatory damages that cover specific, quantifiable financial losses suffered by a plaintiff, such as medical bills or lost wages, due to the defendant's wrongdoing.
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