Evon would like to organize SHO as either an S corporation or as a C corporation generating

Question:

Evon would like to organize SHO as either an S corporation or as a C corporation generating a 9 percent annual before-tax return on a $200,000 investment. Assume individual and corporate tax rates are both 35 percent and individual capital gains and dividend tax rates are 20 percent. SHO will pay out its after-tax earnings every year as a dividend if it is formed as a C corporation. Assume Evon is the sole owner of the entity and ignore FICA taxes. Finally, assume Evon is actively involved in the business.

a. How much would Evon keep after taxes if SHO is organized as either an S corporation or as a C corporation?

b. What are the overall tax rates if SHO is organized as either an S Corporation or as a C corporation?

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...