In 2022 Lane owns 84% of Kim & Associates. Kim & Associates is a law firm and distributes to Lane $250,000. The firm has sales income of $3,250,000 and operating expenses of $1,500,000. They also have $40,000 long term capital gain income. The firm has property with an unadjusted basis of $900,000 and paid W2 wages for the year of $250,000 (already included in the operating expenses). Lane is married (MFJ) and her taxable income (before any income from Kim & Associates) is $475,000. For each independent scenario below how the entity will be taxed and how Lanes return will be affected by the income from Kim & Associates.

A. Kim & Associates is an S- Corporation

B. Kim & Associates is a C-Corporation

C. Kim & Associates is an LLC

D. How would your answer change (or not) in part a if they were a manufacturing company instead of a law firm?