Submit a draft explaining the tax effects of salaries if cash is withdrawn from a business. You must also explain the tax consequences of paying the owners based on the taxable entity selected for the business, as well as the tax consequences for each individualâ€™s personal tax returns.
Specifically, the following critical elements must be addressed:
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D. Explain the tax effect based on providing $180,000 per year for the clientâ€™s salary and $70,000 per year for his daughterâ€™s salary if they withdraw cash from the business or pay dividends as appropriate.
E. Justify the percentage of ownership the clientâ€™s daughter should have in the business based on the type of business entity recommended. Consider the tax law in reference to the recommendation and how the decision will affect the daughterâ€™s tax return.