Agatha is planning to start a new business venture and must decide whether to operate as a sole proprietorship or incorporate. She projects that the business will generate annual cash flow and taxable income of $100,000. Agathas personal marginal tax rate, given her other sources of income, is 37 percent and she qualifies for the 20 percent rate on dividend income. (Ignore any employment tax consequences.)

1. If Agatha operates the business as a sole proprietorship, calculate the annual after-tax cash flow available for reinvestment in the business venture. Assume the sole proprietorship will qualify for the 20 percent QBI deduction.
2. If Agatha operates the business as a regular (C) corporation that makes no dividend distributions, calculate the annual after-tax cash flow available for reinvestment in the business.
3. Now suppose that Agatha wishes to withdraw $20,000 per year from the business and will reinvest any remaining after-tax earnings. If the business is operated as a sole proprietorship, how much after-tax cash flow will remain for reinvestment in the business? How much after-tax cash flow will Agatha have from the withdrawal?
4. If the business is operated as a C corporation and withdrawal in the form of a dividend is made for $20,000, how much after-tax cash flow will remain for reinvestment in the business? How much after-tax cash flow will Agatha retain from the dividend?