Dustin would like to organize LFTS as either an LLC or as a corporation (taxed as a C corporation) generating a 12 percent annual before-tax return on a $300,000 investment. Assume the relevant (marginal) individual tax rate is 37% and corporate tax rate is 21%. Dustins capital gain and dividends tax rate is 20% (ignore the net investment income surtax of 3.8% and the additional Medicare tax of 0.9%. LFTS will pay out its after-tax earnings every year to either its members or its shareholders.

a. Ignoring self-employment taxes, how much would Dustin keep after taxes if LFTS is organized as either an LLC or a corporation (taxed as a C corporation)? (10 points)

b. Ignoring self-employment taxes, what are the overall tax rates (combined owner and entity level) if LFTS is organized as either an LLC or a corporation (taxed as a C corporation)? (10 points)