Ms.Alfred anticipates that her business will generate $500,000 taxable income.She can reduce the total tax burden imposed on this income if she spreads it among five separate corporations.

Question

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Spreading the taxable income among separate corporations may not necessarily reduce the total tax burden imposed on the income, as each corporation would be subject to its own tax liability. In fact, setting up separate corporations can lead to additional administrative and legal costs.

MsAlfred Anticipates That Her Business Will Generate $500,000 Taxable Income