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Business, 16.04.2020 01:01 sandyyknguyen2155

Sandra would like to organize BAL as either an LLC (taxed as a sole proprietorship) or a C corporation. In either form, the entity is expected to generate an 13 percent annual before-tax return on a $750,000 investment. Sandra’s marginal income tax rate is 37 percent and her tax rate on dividends and capital gains is 23.8 percent (including the 3.8 percent net investment income tax). If Sandra organizes BAL as an LLC, she will be required to pay an additional 2.9 percent for self-employment tax and an additional 0.9 percent for the additional Medicare tax. BAL’s income is not qualified business income (QBI) so Sandra is not allowed to claim the QBI deduction. Assume that BAL will distribute all of its after-tax earnings every year as a dividend if it is formed as a C corporation. a. How much cash aftertaxes would Sandra recelve from her Investment In the first year If BAL Is organized as ehan LLC or a C After-tax cash flow LLC

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Sandra would like to organize BAL as either an LLC (taxed as a sole proprietorship) or a C corporati...
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