Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

1 Marof 8 pore Required information Problem 15-51 (LO 15-3) (Algo) The following information applies to the questions dispayed below! Sandra would like to organize

image text in transcribed
image text in transcribed
1 Marof 8 pore Required information Problem 15-51 (LO 15-3) (Algo) The following information applies to the questions dispayed below! Sandra would like to organize LAB as either an LLC (taxed as a sole proprietorship or a corporation. In either form, the entity is expected to generate an 15 percent annual before tax return on a 5680.000 investment Sandra's marginal income tax rates 37 percent, and her tax rate on dividends and capital gains is 23.8 percent including the 38 percent net investment income tax. If Sandra organizes LAB as a LLC, she will be required to pay an adoptional 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 (BI) so Sandra is not allowed to claim the OBI deduction. Assume that LAB will distribute all of its afrax earning every year as dividend if it is formed as a corporation (Round your intermediate computations to the nearest whole dollar amount.) Sed Book Problem 15-51 Parta (Algo) e, How much cash whertaxes would Sandra receive from her investment in the test year if LAB is organized as either an Li.Corac corporation Alex cash flow Prim Comprwin rences ! Required information Problem 15-51 (LO 15-3) (Algo) (The following information applies to the questions displayed below) Sandra would like to organize LAB as either an LLC (taxed as a sole proprietorship or a corporation in either form, the entity is expected to generate an 15 percent annual before tax return on a $680,000 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 taxi. Ir 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 (QI) to Sandra is not allowed to claim the QB deduction. Assume that LAB will distribute all of its after-tax earnings every year as a dividend if it is formed as a corporation (Round your intermediate computations to the nearest whole dollar amount.) Problem 15-51 Part b (Algo) b. What is the overall tax rate on LAB's income in the first year I LAB is organized as an LLC or as a corporation (Round your final answers to 2 decimal places.) LLC Overall Tax Rate 40.80 56 Corporation

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cost Accounting With Integrated Data Analytics

Authors: Karen Congo Farmer, Amy Fredin

1st Edition

1119731860, 9781119731863

More Books

Students also viewed these Accounting questions