[broiler]

I just ran the numbers to see for myself if your tax number was reasonable and I also came up with about $80,000, assuming that you have nothing else going on. The retirement plan contribution of $40k knocked the tax number down to around $60k. I would also suggest health insurance, which is deductible in the same way as the retirement plan.

I would be careful about setting up an S-Corporation because the IRS has been cracking down on reasonable compensation for sole owners. They have no set formula, only an idea of what you should pay yourself in relation to your distributions. The other concern I have is that some states still tax the income of an S-Corporation at the corporate level and for some reason CA came to mind in my mental list. Never underestimate the power of a state to find a good way for double taxation. NY only did away with their tax about 3 years ago on S-Corporation income at the corporate level. I know that CA has a filing fee for S-Corps which is quite high and I don't know if you really want to pay more in tax and accounting fees than necessary with the increased audit risk.