1. Becky is starting a business and wants to consider whether organizing the business as a partnership or corporation would be better depending on how long she wants to keep operating the business. First, she puts together some expectations about what her pre-tax rate of return will be on investments and what tax rates will be over these investment horizons. She expects that the pre-tax rate of return for her business will remain constant at 10% and that the corporate tax rate, personal tax rate, and capital gains tax rates will be 35%, 37%, and 20%, respectively. Becky asks for your assistance in assessing what the after-tax accumulations are for forming in both manners and helping her decide how to organize her business.
   1. Suppose that she decides to originally organize as a partnership and plans to operate for a total of 40 years. However, while the first 20 years maintain the tax rates discussed above, in the remaining 20 years the corporate tax rate is decreased from 35% to 20%. What would be the after-tax accumulation of remaining as a partnership for the full 40 years vs. operating as a partnership for the first 20 years, liquidating, and then incorporating with the liquidate funds? Based on these calculations, which or these two strategies would you recommend for Becky?