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Required informatio Tawana owns and operates a sole proprietorship and has a 37 percent marginal tax...

Required informatio

Tawana owns and operates a sole proprietorship and has a 37 percent marginal tax rate. She provides her son, Jonathon, $9,500 a year for college expenses. Jonathon works as a pizza delivery person every fall and has a marginal tax rate of 15 percent.

a. What could Tawana do to reduce her family tax burden?

b. How much pretax income does it currently take Tawana to generate the $9,500 (after taxes) given to Jonathon? (Round your answer to the nearest whole dollar amount.)

c. If Jonathon worked for his mother’s sole proprietorship, what salary would she have to pay him to generate $9,500 after taxes (ignoring any Social Security, Medicare, or self-employment tax issues)? (Round your answer to the nearest whole dollar amount.)

d. How much money would this strategy save? (Round your intermediate calculations and final answers to the nearest whole dollar amount.)


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