Thomas is the sole owner of Bear Company, which makes custom blankets. This year

Thomas is the sole owner of Bear Company, which makes custom blankets. This year, Bear’s taxable income before any compensation to Thomas was $80,000. Bear also had $30,000 of municipal bond interest. Thomas has significant income from other sources. Thomas is single and in the 24% marginal tax bracket. Determine the tax consequences to both Bear Company and Thomas under the following situations (ignore the 3.8% Medicare surtax on Net Investment Income):
Bear is a C corporation and pays no dividends or salary to Thomas.
Bear is a C corporation and distributes $50,000 of dividends to Thomas.
Bear is a C corporation and pays $50,000 salary to Thomas.
Bear is a sole proprietorship and Thomas withdrew $0.
Bear is a sole proprietorship and Thomas withdrew $50,000.
Write a letter to Thomas summarizing the tax effects of the various scenarios, including some tax planning recommendations. Include an explanation of general concepts surrounding the calculation.
Submission Requirements
Be sure to discuss and reference concepts taken from the assigned textbook reading and relevant research.
Support your paper with the primary internal revenue section (I.R.C.) & at least 4-5 tax, credible, legislative, or court references (of which the textbook may be one).
Review the grading rubric to see how you will be graded for this assignment.
Reference the Citation and Style Manual as needed.
Links to an external site.
Your paper should be 2-3 pages in length