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An example: Sue owns all the stock of ABC, Inc. and it generates $70,000 of taxable income. Under the corporate tax table, the first $50K is taxed at 15% and the next $20K is taxed at 25%. Can Sue reduce taxes at the corporate level by forming another corporation (DEF, Inc) and moving half of her operations from ABC to DEF, so that each corporation’s taxable income completely fits under the 15% tax bracket? Why or why not?
Sue owns all the stock of ABC, Inc. and it generates $70,000 of taxable income. Under thecorporate tax table, the first $50K is taxed at 15% and the next $20K is taxed at 25%. CanSue reduce taxes…
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