Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Integrated Excel - Tax Problem - Entity Choice Blue Eyed Beauty Supply is the talk of the town. When Elaine started her business, she

image text in transcribed

Integrated Excel - Tax Problem - Entity Choice Blue Eyed Beauty Supply is the talk of the town. When Elaine started her business, she had no idea it would evolve to be the number one supplier of cosmetology supply in the region. While her business has been successfully operating as a sole proprietorship for many years, her legal counsel has urged her to form a separate legal entity for a variety of nontax reasons. Elaine will form an LLC but has come to you for advice as to which tax classification is best positioned to pay the least overall tax. She has provided you with her 2022 tax data and the following assumptions to develop an Excel model: Elaine Is Single and her sole source of income is from her business activities . It is expected that her business meets the definition of a trade or business for Qualified Business Income deduction purposes The business generates $140,000 of net income before contemplating any taxes Elaine is assuming a reasonable compensation amount of $50,000 . As a C Corporation, the business will dividend out all earnings after taxes are paid to Elaine Schedule X-Single If taxable income is over: But not over: The tax is: Plus: sssssssssssssssss $ S 10,275.00 $ 10% 10,275.00 S 41,775.00 1,027.50 12% S $ 41,775.00 S 89,075.00 S 4,807.50 22% 89,075.00 $ 170,050.00 15,213.50 24% 170,050.00 $ 215,950.00 34,647.50 32% S 215,950.00 $ 539,900.00 49,335.50 35% $ 539,900.00 $ 162,718.00 37% Schedule C Income Self-Employment Tax Less: 50% Self-Employment Tax AGI Less: Standard Deduction Less: QBI Taxable Income: If taxable income is over: But not over: The tax is: Plus tax percentage: Plus tax amount: Ordinary Personal Income Tax Overall Total Tax Overall Tax Rate Schedule C S 140,000.00 $ 12,950.00

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cornerstones of Financial and Managerial Accounting

Authors: Rich, Jeff Jones, Dan Heitger, Maryanne Mowen, Don Hansen

2nd edition

978-0538473484, 538473487, 978-1111879044

More Books

Students also viewed these Accounting questions

Question

Under what circumstances should derived associations be used?

Answered: 1 week ago

Question

Dont smell (i.e., too much perfume/cologne).

Answered: 1 week ago