Ms. Kona owns a 10 percent interest in Carlton LLC. This year, the LLC generated $72,400 ordinary income. Ms. Kona’s marginal tax rate is 32 percent, and she does not pay SE tax on her LLC income. Compute the tax cost on Ms. Kona’s share of Carlton’s income assuming that she received a $35,000 cash distribution this year. Compute the tax cost on Ms. Kona’s share of Carlton’s income assuming that she received no cash distribution this year
Ms. Kona owns a 10 percent interest in Carlton LLC. This year, the LLC generated $72,400 ordinary income. Ms. Kona’s marginal tax rate is 32 percent, and she does not pay SE tax on her LLC income. Compute the tax cost on Ms. Kona’s share of Carlton’s income assuming that she received a $35,000 cash distribution this year. Compute the tax cost on Ms. Kona’s share of Carlton’s income assuming that she received no cash distribution this year
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Ms. Kona owns a 10 percent interest in Carlton LLC. This year, the LLC generated $72,400 ordinary income. Ms. Kona’s marginal tax rate is 32 percent, and she does not pay SE tax on her LLC income.
- Compute the tax cost on Ms. Kona’s share of Carlton’s income assuming that she received a $35,000 cash distribution this year.
- Compute the tax cost on Ms. Kona’s share of Carlton’s income assuming that she received no cash distribution this year.
My solutions: 1. $13,517, 2. $2,317
This is a homework problem that I got wrong. Could you please explain how to do it correctly?
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