Jayzee Is a Single Taxpayer Who Operates a Sole Proprietorship

question 9

Essay

Jayzee is a single taxpayer who operates a sole proprietorship.He expects his taxable income next year to be $150,000,of which $125,000 is attributed to his sole proprietorship.Jayzee is contemplating incorporating his sole proprietorship.Using the 2018 single individual tax brackets and the corporate tax brackets,how much current tax could this strategy save Jayzee? (Ignore any Social Security,Medicare,or Self Employment Tax issues.)How much income should be retained in the corporation? (Use tax rate schedule)
Note: New Corporate income tax rate has been mentioned as "21% on all taxable income" as per the recent change.

---

Definitions:

Sequential Game

A sequential game is a type of game in game theory where players make decisions or select strategies one after another, with knowledge of the previous players' actions.

Monopolized

Refers to a market situation where a single company or entity has exclusive control over a particular good or service.

Simultaneous Game

A type of game in game theory where players make their moves without knowledge of the other players' actions.

Discourage

To dissuade or deter someone from taking a particular action or continuing a certain behavior by instilling doubt or fear of consequences.