McGraw-Hill's Taxation of Individuals and Business Entities 2020 Edition
11th Edition
ISBN: 9781260432466
Author: SPILKER, Brian
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Question
Chapter 15, Problem 44P
a.
To determine
Determine the cash after taxes that A will receive from her investment in the first year if SHO is organized as either an LLC or a C corporation.
b.
To determine
Calculate the overall tax rate on SHO’s income in the first year if SHO is organized as an LLC or as a C corporation.
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Andrea would like to organize SHO as either an LLC (taxed as a sole proprietorship) or a C corporation. In either form, the entity is expected to generate an 11 percent annual before-tax return on a $240,000 investment. Andrea’s marginal income tax rate is 35 percent and her tax rate on dividends and capital gains is 15 percent. Andrea will also pay a 3.8 percent net investment income tax on dividends and capital gains she recognizes. If Andrea organizes SHO as an LLC, Andrea will be required to pay an additional 2.9 percent for self-employment tax and an additional .9 percent for the additional Medicare tax. Further, she is eligible to claim the full deduction for qualified business income. Assume that SHO will pay out its 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 Amanda receive from her investment in the first year if SHO is organized as an LLC?
Same facts as in Question 1 above. How much cash…
Andrea would like to organize SHO as either an LLC (taxed as a sole proprietorship) or a C corporation. In either form, the
entity is expected to generate an 12 percent annual before-tax return on a $650,000 investment. Andrea's marginal
income tax rate is 35 percent and her tax rate on dividends and capital gains is 15 percent. Andrea will also pay a 3.8
percent net investment income tax on dividends and capital gains she recognizes. If Andrea organizes SHO as an LLC,
Andrea 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. Further, she is eligible to claim the deduction for qualified business income. Assume that SHO will
pay out all of its after-tax earnings every year as a dividend if it is formed as a C corporation.
a. How much cash after taxes would Andrea receive from her investment in the first year if SHO is organized as either an LLC or a C
corporation? (Round intermediate calculations and…
Andrea would like to organize SHO as either an LLC (taxed as a sole proprietorship) or a C corporation. In either form, the entity is expected to generate an 11 percent annual before-tax return on a $350,000 investment. Andrea’s marginal income tax rate is 35 percent and her tax rate on dividends and capital gains is 15 percent. Andrea will also pay a 3.8 percent net investment income tax on dividends and capital gains she recognizes. If Andrea organizes SHO as an LLC, Andrea 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. Further, she is eligible to claim the full deduction for qualified business income. Assume that SHO will pay out all of its after-tax earnings every year as a dividend if it is formed as a C corporation. (Do not round intermediate calculations and round your final answers to the nearest whole dollar.)
a. How much cash after taxes would Andrea receive from her investment in…
Chapter 15 Solutions
McGraw-Hill's Taxation of Individuals and Business Entities 2020 Edition
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