Mackenzie is considering conducting her business, Mac561, as either a single-member LLC or an S corporation. Assume her marginal ordinary income tax rate is 37 percent, her marginal FICA rate on employee compensation is 1.45 percent, her marginal self-employment tax rate is 2.9 percent, and any employee compensation or self-employment income she receives is subject to the 0.9 percent additional Medicare tax. Also, assume Mac561 generated $200,000 of business income before considering the deduction for compensation Mac561 pays to Mackenzie and Mackenzie can claim the qualified business income deduction on Mac561's business income. Determine Mackenzie's after-tax cash flow from the entity's business income and any compensation she receives from the business under the following assumptions: (Round intermediate calculations and your final answers to the nearest whole dollar.)
Mackenzie is considering conducting her business, Mac561, as either a single-member LLC or an S corporation. Assume her marginal ordinary income tax rate is 37 percent, her marginal FICA rate on employee compensation is 1.45 percent, her marginal self-employment tax rate is 2.9 percent, and any employee compensation or self-employment income she receives is subject to the 0.9 percent additional Medicare tax. Also, assume Mac561 generated $200,000 of business income before considering the deduction for compensation Mac561 pays to Mackenzie and Mackenzie can claim the qualified business income deduction on Mac561's business income. Determine Mackenzie's after-tax cash flow from the entity's business income and any compensation she receives from the business under the following assumptions: (Round intermediate calculations and your final answers to the nearest whole dollar.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Required information
[The following information applies to the questions displayed below.]
Mackenzie is considering conducting her business, Mac561, as either a single-member LLC or an S corporation. Assume
her marginal ordinary income tax rate is 37 percent, her marginal FICA rate on employee compensation is 1.45 percent,
her marginal self-employment tax rate is 2.9 percent, and any employee compensation or self-employment income she
receives is subject to the 0.9 percent additional Medicare tax. Also, assume Mac561 generated $200,000 of business
income before considering the deduction for compensation Mac561 pays to Mackenzie and Mackenzie can claim the
qualified business income deduction on Mac561's business income. Determine Mackenzie's after-tax cash flow from the
entity's business income and any compensation she receives from the business under the following assumptions: (Round
intermediate calculations and your final answers to the nearest whole dollar.)
c. Mackenzie conducted Mac561 as an S corporation and she received a salary of $20,000. All business income allocated to her is
also distributed to her.
After-tax cash flow](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6fc66b2f-9297-4305-8a69-73a01f4c8cc9%2F86fd7060-bc11-4ee0-a843-e4e520f2f49d%2Fyh0r1vb_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Required information
[The following information applies to the questions displayed below.]
Mackenzie is considering conducting her business, Mac561, as either a single-member LLC or an S corporation. Assume
her marginal ordinary income tax rate is 37 percent, her marginal FICA rate on employee compensation is 1.45 percent,
her marginal self-employment tax rate is 2.9 percent, and any employee compensation or self-employment income she
receives is subject to the 0.9 percent additional Medicare tax. Also, assume Mac561 generated $200,000 of business
income before considering the deduction for compensation Mac561 pays to Mackenzie and Mackenzie can claim the
qualified business income deduction on Mac561's business income. Determine Mackenzie's after-tax cash flow from the
entity's business income and any compensation she receives from the business under the following assumptions: (Round
intermediate calculations and your final answers to the nearest whole dollar.)
c. Mackenzie conducted Mac561 as an S corporation and she received a salary of $20,000. All business income allocated to her is
also distributed to her.
After-tax cash flow
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