Jeff and Ed form The Tax Museum as an LLC, which will be taxed as a partnership. They each own 50% of the LLC. Neither is employed by the LLC. In the first year of operation, the LLC generates $1 million of taxable income, all of which is ordinary, and pays $200,000 in distributions to the owners ($100,000 each to Jeff and Ed). Assuming a 21% corporate tax rate, a 35% personal tax rate on ordinary income, and a 15% personal tax rate on dividends, how much tax will be paid in the first year? Group of answer choices $0 tax for the LLC, $175,000 personal tax for each of Jeff and Ed $210,000 tax for the LLC, $15,000 personal tax for each of Jeff and Ed $210,000 tax for the LLC, $175,000 personal tax for each of Jeff and Ed $0 tax for the LLC, $15,000 personal tax for each of Jeff and Ed None of the above
Jeff and Ed form The Tax Museum as an LLC, which will be taxed as a partnership. They each own 50% of the LLC. Neither is employed by the LLC. In the first year of operation, the LLC generates $1 million of taxable income, all of which is ordinary, and pays $200,000 in distributions to the owners ($100,000 each to Jeff and Ed). Assuming a 21% corporate tax rate, a 35% personal tax rate on ordinary income, and a 15% personal tax rate on dividends, how much tax will be paid in the first year? Group of answer choices $0 tax for the LLC, $175,000 personal tax for each of Jeff and Ed $210,000 tax for the LLC, $15,000 personal tax for each of Jeff and Ed $210,000 tax for the LLC, $175,000 personal tax for each of Jeff and Ed $0 tax for the LLC, $15,000 personal tax for each of Jeff and Ed None of the above
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Jeff and Ed form The Tax Museum as an LLC, which will be taxed as a partnership . They each own 50% of the LLC. Neither is employed by the LLC. In the first year of operation, the LLC generates $1 million of taxable income, all of which is ordinary, and pays $200,000 in distributions to the owners ($100,000 each to Jeff and Ed). Assuming a 21% corporate tax rate, a 35% personal tax rate on ordinary income, and a 15% personal tax rate on dividends, how much tax will be paid in the first year?
Group of answer choices
$0 tax for the LLC, $175,000 personal tax for each of Jeff and Ed
$210,000 tax for the LLC, $15,000 personal tax for each of Jeff and Ed
$210,000 tax for the LLC, $175,000 personal tax for each of Jeff and Ed
$0 tax for the LLC, $15,000 personal tax for each of Jeff and Ed
None of the above
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