McGraw-Hill's Taxation of Individuals and Business Entities 3rd Edition by Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver

Exercise 40

Bulldog Corporation reported taxable income of $500,000 in 2011 before any deduction for any payment to its sole shareholder and employee, Georgia Brown.Bulldog chose to pay a bonus of $100,000 to Georgia at year-end.Bulldog Corporation is subject to a flat-rate tax of 34%.The bonus meets the requirements to be "reasonable" and is therefore deductible by Bulldog.Georgia is subject to a marginal tax rate of 35% on the bonus.What is the income tax imposed on the corporate income earned by Bulldog and the income tax on the bonus paid to Georgia?