Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. amanda would like to organize bal as either an llc

Amanda would like to organize BAL as either an LLC (taxed as a sole proprietorship) or...

60.1K

Verified Solution

Question

Accounting

Amanda would like to organize BAL as either an LLC (taxed as asole proprietorship) or a C corporation. In either form, the entityis expected to generate an 8 percent annual before-tax return on a$500,000 investment. Amanda’s marginal income tax rate is 37percent and her tax rate on dividends and capital gains is 23.8percent (including the 3.8 percent net investment income tax). IfAmanda organizes BAL as an LLC, she will be required to pay anadditional 2.9 percent for self-employment tax and an additional0.9 percent for the additional Medicare tax. Also, she is eligibleto claim a full deduction for qualified business income on BAL’sincome. Assume that BAL will distribute half of its after-taxearnings every year as a dividend if it is formed as a Ccorporation. (Round your intermediate computations to the nearestwhole dollar amount.)

b. What is the overall tax rate on BAL’s income in the firstyear if BAL is organized as an LLC or as a C corporation? (Roundyour final answers to 2 decimal places.)

Answer & Explanation Solved by verified expert
3.8 Ratings (561 Votes)
    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Geometry
1.2K views

In AABC, centroid D is on median AM AD=x+4 and DM = 2x - 4.Find...

Psychology
1.2K views

Choose a space and write about the various characters that occupy that space in details. Like...

Psychology
1.2K views

Explain how dynamic assessment is consistent with vygotsky’s zone of proximal development and with scaffolding.

Accounting
1.2K views

On 9/1/16, Armada Company adopted a stock option plan for Joe and Erica to purchase common...

Basic Math
1.2K views

common inhabitant of human intestines is the bacterium Escherichia coli named after the German pediatrician...

Statistics
1.2K views

The probability that a randomly selected IRSC student is an athlete is 0 19 The...

Algebra
1.2K views

1 What is 2 45 expressed in simplest radical form 1 3 5 2 5...

Algebra
1.2K views

Find the center and foci of the ellipse:64x +100y2 + 768x-600y - 3196= 0Center =...

Algebra
1.2K views

Raise the number to the given power and write the answer in rectangular form 2...

Accounting
1.2K views

The inventory records for Radford Company reflected the following: Beginning inventory @ May 1 100...

Accounting
1.2K views

Find the mean , variance 2 and standard deviation for the pmf given below

Accounting
1.2K views

Ruth Madlala is 66 years old and retired. She and her husband are members of...