Question 5. How much total tax is paid to the federal government?
Inez is the sole shareholder in TIP Technologies, Inc., a C-corp. TIP Tech has a banner year and makes $1,000,000 in profit. The company decides to re-invest most of this profit into the continued growth of the business, but it pays Inez a distribution of $100,000. How much total tax is paid to the federal government? (Assume a corporate tax rate of 35% and an individual tax rate of 20%.)