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

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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