Without

Bonus

With

Bonus

Profit before owner’s compensation

500,000

500,000

Owner’s regular compensation

200,000

200,000

Owner’s bonus

0

50,000

Total owner’s compensation

200,000

(200,000)

250,000

(250,000)

Profit reportable on owner’s individual tax return

300,000

250,000

Plus Owner’s compensation

200,000

250,000

Taxable income on owner’s individual tax return

500,000

500,000