Amanda would like to organize BAL as either an LLC (taxed as a sole proprietorship) or a C corporation. In either form, theentity is expected to generate an 8 percent annual before-tax return on a $500,000 investment. Amanda's marginalincome tax rate is 37 percent, and her tax rate on qualified dividends and net capital gains is 20%. Assume that BAL willdistribute half of its after-tax earnings every year as a dividend if it is formed as a C corporation. Assume the income is noteligible for the QBI deduction. Further, when computing your answers, include the self-employment tax (use a 2.9%marginal rate for self-employment income because Amanda has salary over $147,000 from her employer) but not theadditional Medicare tax or the net investment income tax.a. How much cash after taxes would Amanda receive from her investment in the first year if BAL is organized as an LLC? What if BAL isorganized as a C corporation?Note: Round Intermediate calculations and your final answers to the nearest whole dollar.Answer is complete but not entirely correct.After-tax cashflowLLCсcorporation$$24,46721,026

Tax Tax refers to mandatory obligations on any individual or entity by any government agency. There…

entity is expected to generate an 8 percent annual before-tax return on a $500,000 Investme income tax rate is 37 percent, and her tax rate on qualified dividends and net capital gains is 2 distribute half of its after-tax earnings every year as a dividend if it is formed as a C corporatio eligible for the QBI deduction. Further, when computing your answers, include the self-employ marginal rate for self-employment Income because Amanda has salary over $147,000 from he additional Medicare tax or the net investment income tax. v much cash after taxes would Amanda receive from her investment in the first year if BAL is o ized as a C corporation? Round Intermediate calculations and your final answers to the nearest whole dollar. nswer is complete but not entirely correct. After-tax cash flow = ation $ S 399 24,467 21,026

entity is expected to generate an 8 percent annual before-tax return on a $500,000 Investme income tax rate is 37 percent, and her tax rate on qualified dividends and net capital gains is 2 distribute half of its after-tax earnings every year as a dividend if it is formed as a C corporatio eligible for the QBI deduction. Further, when computing your answers, include the self-employ marginal rate for self-employment Income because Amanda has salary over $147,000 from he additional Medicare tax or the net investment income tax. v much cash after taxes would Amanda receive from her investment in the first year if BAL is o ized as a C corporation? Round Intermediate calculations and your final answers to the nearest whole dollar. nswer is complete but not entirely correct. After-tax cash flow = ation $ S 399 24,467 21,026

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter18: Comparative Forms Of Doing Business

Section: Chapter Questions

Problem 10P

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Amanda 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 $500,000 investment. Amanda's marginal income tax rate is 37 percent, and her tax rate on qualified dividends and net capital gains is 20%. Assume that BAL will distribute half of its after-tax earnings every year as a dividend if it is formed as a C corporation. Assume the income is not eligible for the QBI deduction. Further, when computing your answers, include the self-employment tax (use a 2.9% marginal rate for self-employment income because Amanda has salary over $147,000 from her employer) but not the additional Medicare tax or the net investment income tax. b. What is the overall tax rate on BAL's income in the first year if BAL is organized as an LLC or as a C corporation? Note: Round intermediate calculations to the nearest whole dollar. Round your final answers to 2 decimal…
David would like to organize HOS (a business entity) as either an S corporation or as a corporation (taxed as a C corporation) generating a 12 percent annual before-tax return on a $372,000 investment. David’s marginal tax rate is 24 percent and the corporate tax rate is 21 percent. David’s marginal tax rate on individual capital gains and dividends is 15 percent. HOS will pay out its after-tax earnings every year to either its members or its shareholders. If HOS is taxed as an S corporation, David’s business income allocation would be subject to a 3.8 percent net investment income tax (he is a passive investor in the business), and the business income allocation would qualify for the deduction for qualified business income. (Round your intermediate calculations and final answer to whole number dollar amount.) a. How much would David keep after taxes if HOS is organized as either an S corporation or a C corporation? b. What are the overall tax rates (combined owner and entity level)…
Sandra would like to organize LAB 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 $660,000 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 LAB 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. 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 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.) Problem 15-51 Part a (Algo) a. How much cash after taxes would Sandra receive from her investment in the first year if LAB is…
Amanda 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 $500,000 investment. Amanda'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 Amanda 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. Also, she is eligible to claim a full deduction for qualified business income on BAL's income. Assume that BAL will distribute half 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 Amanda receive from her investment in the first year if BAL is organized as either an…
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…
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 capital gains is 15%. Andrea will also pay a 3.8% net investment income tax on dividends and capital gains she recognizes. If Andrea organized SHO as an LLC, Andrea will be required to pay an additional 2.9% for self-employment tax and an additional 0.9% 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.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…
Amanda 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 $500,000 investment. Amanda’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 Amanda 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. Also, she is eligible to claim a full deduction for qualified business income on BAL’s income. Assume that BAL will distribute half 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 Amanda receive from her investment in the first year if BAL is organized as either an LLC or a C corporation? (Round intermediate calculations and your final answers to the nearest…
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…
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…
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…
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…
Required information [The following information applies to the questions displayed below.] Amanda 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 $500,000 investment. Amanda's marginal income tax rate is 37 percent, and her tax rate on qualified dividends and net capital gains is 20%. Assume that BAL will distribute half of its after-tax earnings every year as a dividend if it is formed as a C corporation. Assume the income is not eligible for the QBI deduction. Further, when computing your answers, include the self-employment tax (use a 2.9% marginal rate for self-employment income because Amanda has salary in excess of the wage base limit) but not the additional Medicare tax or the net investment income tax. a. How much cash after taxes would Amanda receive from her investment in the first year if BAL is organized as an LLC? What if BAL is…