Jack Flubber, who owns Sons of Flubber Construction Co. and runs it as a proprietorship, had gross profits last year of $80,000. His personal and family expenses are $52,000 and he has $7,000 in exemptions and deductions. He paid $17,000 in taxes. If he paid himself a salary of$55,000 taxed at 20%, would it be advantageous for him to incorporate as a closely held corporation? Explain.

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Jack Flubber, who owns Sons of Flubber Construction Co. and runs it as a proprietorship, had gross profits last year of $80,000. His personal and family expenses are $52,000 and he has $7,000 in exemptions and deductions. He paid $17,000 in taxes. If he paid himself a salary of$55,000 taxed at 20%, would it be advantageous for him to incorporate as a closely held corporation? Explain.

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