question archive Drew and his wife Cassie own all of the stock of Thrush, Inc

Drew and his wife Cassie own all of the stock of Thrush, Inc

Subject:AccountingPrice: Bought3

Drew and his wife Cassie own all of the stock of Thrush, Inc. Cassie is the president and Drew is the vice president. Cassie and Drew are paid salaries of $400,000 and $300,000, respectively, each year. They consider the salaries to be reasonable based on a comparison with salaries paid for comparable positions in comparable companies. They project Thrush's taxable income for next year, before their salaries, to be $800,000. They decide to place their four teenage children on the payroll and to pay them total salaries of $100,000. The children will each work about five hours per week for Thrush.
a. What are Drew and Cassie trying to achieve by hiring the children?

b. Calculate the tax consequences of hiring the children on Thrush, Inc., and on Drew and Cassie's family.

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