Benton Company: tax liability under different legal forms

Benton Company (BC) has one owner, who is in the 35% Federal income tax bracket. BC's gross income is $295,000, and its ordinary trade or business deductions are $135,000. Compute the tax liability on BC's income for 2011 under the following assumptions:

a. BC is operated as a proprietorship, and the owner withdraws $70,000 for personal use.

b. BC is operated as a corporation, pays out $70,000 as salary, and pays no dividends to its shareholders.

c. BC is operated as a corporation and pays out no salary or dividends to its shareholder.

d. BC is operated as a corporation, pays out $70,000 as salary to its shareholder, and pays out the remainder of its earnings as dividends.