CTC$).$

Daisy understands that it will take a few years for the business to become profitable. She would like to grow her business and perhaps at some point $"$go public" or sell the business to a large retailer.

He wanted to get in on the ground floor because he really likes the product and believes CTC will be wildly successful. While CTC originally has three investors, Daisy and Kesha have plans to grow the

business and seek more owners and capital in the future.

interest, and Aryan would contribute cash for a $40$ percent interest. The plan called for Daisy and Kesha to be actively involved in managing the business, while Aryan would not be$.$ The three equity

owners' contributions are summarized as follows:

Working together, Daisy and Kesha made the following five$-$year income and loss projections for CTC$.$ They anticipate the business will be profitable and that it will continue to grow after the first five

years.they plan to have two business locations $($in different cities$).$ Daisy would take responsibility for the activities of one location and Kesha would take responsibility for the other. Finally, they would like to arrange for some performance$-$based financial incentives for each location.To get the business activities started, Daisy and Kesha determined CTC would need to borrow $$800,000$ to purchase a building to house its manufacturing facilities and its administrative offices $($at least for now$).$ Also, in need of additional cash, Daisy and Kesha arranged to have CTC borrow $$300,000$ from a local bank and to borrow $$200,000$ cash from Aryan. CTC would pay Aryan a market rate of interest on the loan, but there was no fixed date for principal repayment. Identify significant tax and nontax issues or concerns that may differ across entity types and discuss how they are relevant to the choice of entity decision for CTC$.$