Janice is the sole owner of Catbird Company. In the current year, Catbird had
Operating income of $100,000
A long-term capital gain of 15,000
A short-term capital loss of -17,500
Dividend income of (stock owned = 2%) 8,000
A charitable contribution of 5,000
Distribution to Janice of 70,000
Catbird is a regular domestic corporation and is not a professional service corporation.
How much is Catbird's taxable income? Show your work.
Can you definitively say that the distribution to Janice was a dividend? Yes or no. Explain.
Catbird paid a salary of $300,000 to Janice to serve as CEO. If the IRS proposes that this salary is excessive and no more than $175,000 can possibly be justified, what will be the result to Catbird and Janice? Explain.
Assuming taxable income was $55,000, how much is Catbird"s federal income tax for the year? Show your work