Andrea would like to organize SHO as either an LLC (taxed as a sole propriatorship) or a C corporation. In either form, the entity is expected to generate an 10 % annual before-tax return on a $590000 investment. Andrea's marginal income tax rate is 35% and her tax rate on dividends and capital gains is 15%. Andrea will also pay a 3.8% net investment income tax on dividends and capital gains she recognizes. If Andrea organizes SHO as an LLC, Andrea will be required to pay an additional 2.9% for self-employment tax and an additional 0.9 % for the additional Medicare tax. Further, she is eligible to claim the deduction for qualified business income. Assume that SHO will pay out of its after-tax earnings every year as a dividend if it is formed as a C corporation.

A.How much cash after taxes would Andrea receive from her investment in the first year if SHO is organized as either an LLC or C corporation?

B. What is the overall tax rate on SHO's income in the first year if SHO is organized as an LLC or as a C corporation?