Mrs. Fuente, who has a 37% marginal tax rate on ordinary income, is the sole shareholder and CEO of Furey Inc. She also holds a $1 million interest-bearing note issued by Furey. The corporation's current-year financial records show the following:
Sales revenue.......................................................................$1,879,000
Mrs. Fuente's salary...............................................................(160,000)
Other operating expenses.................................................(414,000)
Interest paid on Mrs. Fuente's note.................................(60,000)
Dividend distributed to Mrs. Fuente..............................(100,000)
Compute Mrs. Fuente's tax on her income from Furey. (Ignore payroll taxes in your calculations.)
A. $64,000
B. $91,200
C. $101,400
D. $118,400