1. Abe and Mary would like to organize Lincoln Logs as either an LLC or as a C corporation generating an 8 percent annual before-tax return on a $160,000 investment. Assume individual tax rate is 35 percent and individual capital gains and dividend tax rates are 15 percent. Abe and Mary will also pay a 3.8 percent net investment income tax on dividends and capital gains she recognizes. If Abe and Mary organize Lincoln Logs as an LLC, Abe and Mary will be required to pay an additional 2.9 percent for self-employment tax and an additional .9 percent for the additional Medicare tax. They will also be eligible to claim the full deduction for qualified business income. Lincoln Logs will pay out its after-tax earnings every year as a dividend if it is formed as a C corporation. Assume Abe and Mary are equal partners in the entity (and they will file MFJ). "C 52. In its first year of existence (year 1), SCC corporation (a C corporation) reported a loss for tax purposes of $30,000. How much tax will SCC pay in year 2 if it reports taxable income from operations of $20,000 before considering loss carryovers under the following assumptions? a) Year 1 is 2017. b) Year 1 is 2018.