Sandra would like to organize LAB as either an LLC (taxed as a sole proprietorship) or a C corporation. In either form, theentity is expected to generate an 13 percent annual before-tax return on a $660,000 investment. Sandra's marginalincome tax rate is 37 percent, and her tax rate on dividends and capital gains is 23.8 percent (including the 3.8 percent netinvestment 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 businessincome (QBI) so Sandra is not allowed to claim the QBI deduction. Assume that LAB will distribute all of its after-taxearnings every year as a dividend if it is formed as a C corporation. (Round your intermediate computations to thenearest whole dollar amount.)Problem 15-51 Part b (Algo)b. What is the overall tax rate on LAB's income in the first year if LAB is organized as an LLC or as a C corporation? (Round your finalanswers to 2 decimal places.)Overall Tax RateLLCC corporation Sandra would like to organize LAB as either an LLC (taxed as a sole proprietorship) or a C corporation. In either form, theentity is expected to generate an 13 percent annual before-tax return on a $660,000 Investment. Sandra's marginalIncome tax rate is 37 percent, and her tax rate on dividends and capital gains is 23.8 percent (including the 3.8 percent netinvestment 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 businessincome (QBI) so Sandra is not allowed to claim the QBI deduction. Assume that LAB will distribute all of its after-taxearnings every year as a dividend if it is formed as a C corporation. (Round your intermediate computations to thenearest 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 organized as either an LLC or a Ccorporation?LLCC corporationAfter-tax cash flow

C corporation -A corporation with a legal structure that allows its owners, or shareholders, to be…

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.) oblem 15-51 Part b (Algo) What is the overall tax rate on LAB's income in the first year if LAB is organized as an LLC or as a C corporation? (Round your final mwers to 2 decimal places.) LLC C corporation Overall Tax Rate

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.) oblem 15-51 Part b (Algo) What is the overall tax rate on LAB's income in the first year if LAB is organized as an LLC or as a C corporation? (Round your final mwers to 2 decimal places.) LLC C corporation Overall Tax Rate

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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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…
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b)
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