FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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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% annual before-tax return on a $200,000 investment. Andrea’s marginal income tax rate is 35% and her tax rate on dividends and
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?
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?
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