Mr Longwood and Mrs Compute the Combined Tax Cost for LK, Mr

Mr. Longwood and Mrs. Kennett are the equal shareholders in LK Corporation. Both shareholders have a 37 percent marginal tax rate on ordinary income. LK's financial records show the following:
$\begin{array}{llr} \text { Gross income from sales} &\$875,000\\ \text { Operating expenses } &(420,000)\\ \text {Interest paid on debt to shareholders } &(75,000)\\ \text { Dividend distributions:} &\\ \text { Mr. Longwood } &(50,000)\\ \text { Mrs. Kennett} &(50,000)\\\end{array}$
Compute the combined tax cost for LK, Mr. Longwood, and Mrs. Kennett attributable to LK's operations.How would your computation change if the interest on the shareholder debt was $175,000 and LK paid no dividends?