Teddy would like to organize his new business Newco as either an LLC or C...
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Accounting
Teddy would like to organize his new business Newco as either an LLC or C corporation. In its first year, Teddy expects that Newco will have $500,000 in book and taxable income before salary expense paid to Teddy of $100,000. Assume inidividual ordinary income tax rates are 35%, corporate tax rates are 21%, and inidivudal capital gain and dividend tax rates are 20%. Teddy expects to take all of the after-tax earnings out of Newco.
1. what is the total tax that will be paid by both Newco and Teddy if Newco is organized as an LLC?
2. what is the total tax that will be paid by both Newco and Teddy if Newco is organized as a C corporation?
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