Bob’s granddad paid Bob a salary of $12,000 to work in the family business. Granddad’s marginal...

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Bob’s granddad paid Bob a salary of $12,000 to work in the family business. Granddad’s marginal...

Bob’s granddad paid Bob a salary of $12,000 to work in the family business. Granddad’s marginal tax bracket was 32%. Brooklyn had no other income.

What is the net savings to Granddad and Bob (Grandad’s tax savings – Bob’s gross tax)?

business accounting

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Answer 1

Answer #1

Assuming Salary of $12000 is annual:

Tax Saving for Grandda = 32% * 12000 = 3840

Bob's Tax liability:

Gross Income = 12000

Less: Standard Deduction = 12200

Taxable Income = 0

Tax = 0

Therefore Sacings = 3840 - 0 = $ 3840

(US Taxation assumed)

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Answer 2

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