Hi. I'm having trouble figuring out this problem. For part A, the after-tax cash flow for an S corporation is supposed to be $ 27,994 and and the after-tax cash flow for a C corporation is supposed to be $24,174. I'm not sure how to arrive at those correct answers.

For section B, the overall tax rate if filed as an S corporation is supposed to be 22.24% and 32.85% if filed as a C corporation. I'm also not sure at how to arrive at these percentages. Can you please show me step-by-step on how to arrive at the correct results? Also, can you please write your explanations neatly or have them typed.

I would greatly appreciate it.

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David would like to organize HOS (a business entity) as either an S corporation or as a corporation (taxed as a C corporation) generating a 12 percent annual before-tax return on a $360,000 investment. Davids marginal tax rate is 24 percent and the corporate tax rate is 21 percent. Davids marginal tax rate on individual capital gains and dividends is 15 percent. HOS will pay out its after-tax earnings every year to either its members or its shareholders.

If HOS is taxed as an S corporation, Davids business income allocation would be subject to a 3.8 percent net investment income tax (he is a passive investor in the business), and the business income allocation would qualify for the deduction for qualified business income. (Round your intermediate calculations and final answer to whole number dollar amount.)

a. How much would David keep after taxes if HOS is organized as either an S corporation or a C corporation?

b. What are the overall tax rates (combined owner and entity level) if HOS is organized as either an S corporation or a C corporation?