Required informationProblem 04-48 (LO 04-3) (Algo)[The following information applies to the questions displayed below.]Andrea would like to organize SHO as either an LLC (taxed as a sole proprietorship) or a Ccorporation. In either form, the entity is expected to generate an 10 percent annual before-taxreturn on a $320,000 investment. Andrea's marginal income tax rate is 35 percent and her tax rateon dividends and capital gains is 15 percent. Andrea will also pay a 3.8 percent net investmentincome tax on dividends and capital gains she recognizes. If Andrea organizes SHO as an LLC, shewill be required to pay an additional 2.9 percent for self-employment tax and an additional 0.9percent for the additional Medicare tax. Further, she is eligible to claim the deduction for qualifiedbusiness income. Assume that SHO will pay out all of its after-tax earnings every year as a dividendif it is formed as a C corporation.Problem 04-48 Part b (Algo)b. What is the overall tax rate on SHO's income in the first year if SHO is organized as an LLC or as a C corporation?(Round intermediate calculations to the nearest whole dollar. Round your final answers to 2 decimal places.)Answer is not complete.Overall Tax RateLLCC corporation35.85% !Required informationProblem 04-48 (LO 04-3) (Algo)[The following information applies to the questions displayed below.]Andrea would like to organize SHO as either an LLC (taxed as a sole proprietorship) or a Ccorporation. In either form, the entity is expected to generate an 10 percent annual before-taxreturn on a $320,000 investment. Andrea's marginal income tax rate is 35 percent and her tax rateon dividends and capital gains is 15 percent. Andrea will also pay a 3.8 percent net investmentincome tax on dividends and capital gains she recognizes. If Andrea organizes SHO as an LLC, shewill be required to pay an additional 2.9 percent for self-employment tax and an additional 0.9percent for the additional Medicare tax. Further, she is eligible to claim the deduction for qualifiedbusiness income. Assume that SHO will pay out all of its after-tax earnings every year as a dividendif it is formed as a C corporation.Problem 04-48 Part a (Algo)a. How much cash after taxes would Andrea receive from her investment in the first year if SHO is organized as eian LLC or a C corporation? (Round intermediate calculations and your final answers to the nearest whole dollarAnswer is complete but not entirely correct.After-tax cashflowLLC2$22,067 XC corporation20,527

04-48 (LO 04-3) (Algo) wing information applies to the qu puld like to organize SHO as eithe en. In either form, the entity is expe a $320,000 investment. Andrea's nds and capital gains is 15 perçent

04-48 (LO 04-3) (Algo) wing information applies to the qu puld like to organize SHO as eithe en. In either form, the entity is expe a $320,000 investment. Andrea's nds and capital gains is 15 perçent

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter23: Exempt Entities

Section: Chapter Questions

Problem 3DQ

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Sandra would like to organize LAB (a legal corporation) as either an S corporation or a C corporation for tax purposes. In either form, the entity is expected to generate an 8 percent annual before-tax return on a $1,075,000 investment. Sandra's marginal income tax rate is 37 percent and her tax rate on qualified dividends and net capital gains is 20 percent. LAB's income is not qualified business income (QBI), so Sandra is not allowed to claim the QBI deduction. Assume that LAB will distribute all of its earnings after entity-level taxes every year. Ignore the additional Medicare tax and the net investment income tax when computing your answers. Note: Round your intermediate computations to the nearest whole dollar amount. a. How much cash after taxes would Sandra receive from her investment in the first year if LAB is organized as either an S corporation or a C corporation? b. What is the overall tax rate on LAB's income in the first year if LAB is organized as an S corporation or as…
Sandra would like to organize LAB (a legal corporation) as either an S corporation or a C corporation for tax purposes. In either form, the entity is expected to generate an 8 percent annual before-tax return on a $500,000 investment. Sandra's marginal income tax rate is 37 percent and her tax rate on qualified dividends and net capital gains is 20 percent. LAB's income is not qualified business income (QBI), so Sandra is not allowed to claim the QBI deduction. Assume that LAB will distribute all of its earnings after entity-level taxes every year. Ignore the additional Medicare tax and the net investment income tax when computing your answers. Note: Round your intermediate computations to the nearest whole dollar amount. b. What is the overall tax rate on LAB's income in the first year if LAB is organized as an S corporation or as a C corporation? Note: Round your final answers to 2 decimal places.
5.Tremaine would like to organize UTA as either an S Corporation or a C corporation. In either form, the entity will generate a 10 percent annual before-tax return on a $1,200,000 investment. Tremaine’s marginal income tax rate is 37 percent and his tax rate on dividends and capital gains is 23.8 percent (including the net investment income tax). If Tremaine organizes UTA as an S corporation he will be allowed to claim the deduction for qualified business income. Also, because Tremaine will participate in UTA’s business activities, the income from UTA will not be subject to the net investment income tax. Assume that UTA will pay out 100 percent of its after-tax earnings every year as a dividend if it is formed as a C corporation. How much would cash after-taxes would Tremaine receive from his investment in the first year if UTA is organized as either an S corporation? 6.Same facts as in Question 5 above. How much would cash after-taxes would Tremaine receive from his investment in the…
Sandra would like to organize LAB (a legal corporation) as either an S corporation or a C corporation for tax purposes. In either form, the entity is expected to generate an 8 percent annual before - tax retum on a $500, 000 investment. Sandra's marginal income tax rate is 37 percent and her tax rate on qualified dividends and net capital gains is 20 percent, LAB's income is not qualified business income (OBI), so Sandra is not allowed to claim the QBI deduction. Assume that LAB will distribute all of its earnings after entity level taxes every year. Ignore the additional Medicare tax and the net investment income tax when computing your answers. Note: Round your intermediate computations to the nearest whole dollar amount. b. What is the overall tax rate on LAB's income in the first year if LAB is organized as an S corporation or as a C corporation? Note: Round your final answers to 2 decimal places..
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Sandra would like to organize LAB (a legal corporation) as either an Scorporation or a C corporation for tax purposes. In either form, the entity isexpected to generate an 8 percent annual before-tax return on a $500,000investment. Sandra marginal income tax rate is 37 percent and her tax rateon qualified dividends and net capital gains is 20 percent. LAB income is notqualified business income (QBI), so Sandra is not allowed to claim the QBIdeduction. Assume that LAB will distribute all of its earnings after entity-leveltaxes every year. Ignore the additional Medicare tax and the net investmentincome tax when computing your answers. a. How much cash after taxes would Sandra receive from her investment inthe first year if LAB is organized as either an S corporation or a Ccorporation?
Sandra would like to organize LAB (a legal corporation) as either an Scorporation or a C corporation for tax purposes. In either form, the entity isexpected to generate an 8 percent annual before-tax return on a $500,000investment. Sandra marginal income tax rate is 37 percent and her tax rateon qualified dividends and net capital gains is 20 percent. LAB income is notqualified business income (QBI), so Sandra is not allowed to claim the QBIdeduction. Assume that LAB will distribute all of its earnings after entity-leveltaxes every year. Ignore the additional Medicare tax and the net investmentincome tax when computing your answers. b. What is the overall tax rate on LAB income in the first year if LAB isorganized as an S corporation or as a C corporation?
Required information Skip to question [The following information applies to the questions displayed below.] Sandra would like to organize LAB (a legal corporation) as either an S corporation or a C corporation for tax purposes. In either form, the entity is expected to generate an 8 percent annual before-tax return on a $500,000 investment. Sandra's marginal income tax rate is 37 percent and her tax rate on qualified dividends and net capital gains is 20 percent. LAB's income is not qualified business income (QBI), so Sandra is not allowed to claim the QBI deduction. Assume that LAB will distribute all of its earnings after entity-level taxes every year. Ignore the additional Medicare tax and the net investment income tax when computing your answers. Note: Round your intermediate computations to the nearest whole dollar amount. b. What is the overall tax rate on LAB's income in the first year if LAB is organized as an S corporation or as a C corporation? Note: Round your…
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 8 percent annual before-tax return on a $520,000 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 How much cash after taxes would Sandra receive from her investment in the first year if BAL is organized as either an LLC or a C corporation? b. What is the overall tax rate on BAL’s income in the first year…
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 7 percent annual before-tax return on a $690,000 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. (Round your intermediate computations to the nearest whole dollar amount.) a. How much cash after taxes would Sandra receive from her investment in the first year if BAL is organized as either an LLC or a…
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