Good morning,

Please find attached a question I would like assistance with.

Thanks,

WillieMae

5. A taxpayer capitalizes a wholly owned corporation with $100,000. The corporation invests in a project that earns an annual pretax rate of return of 15% and faces a corporate tax rate of 15%. The taxpayer pays tax at a rate of 39.6% (both ordinary and capital gain) and expects to liquidate the corporation after 20 years. a. What is the after-tax rate of return on this investment? b. Do you recommend that the taxpayer make this investment via an S corporation to avoid double taxation