Question
Able is considering what form of entity to operate a new business. The new business's projected income and losses for the first two years of
Able is considering what form of entity to operate a new business. The new business's projected income and losses for the first two years of operation, as well as Ables income from other sources, are listed in the table below.
What will be the total annual tax cost for the new venture and the owner for years 1 and 2?
| All numbers in (000) | Year 1 | Year 2 |
| New Business |
|
|
| Revenue from Sales | 50,000 | 70,000 |
| Deductible Expenses | 60,000 | 30,000 |
| Federal Corporate Income Tax Rate | 35% | 35% |
| Able's Taxable Income from Other Sources | 40,000 | 50,000 |
| Federal Individual Income Tax Rate | 39% | 39% |
Requirements:
Clearly identify the requirements being addressed. Show all calculations within the cells of an Excel spreadsheet. This means that you must use formulas and links so that your thought process can be examined. Make effective use of comments to convey your thought process as well. No hard coding of solutions is permitted. Submit a single MS Excel file for grading.
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