Question
Jake started a trucking business. He wants to know the tax ramifications for the various business entities. His projections indicate the following for his new
Jake started a trucking business. He wants to know the tax ramifications for the various business entities. His projections indicate the following for his new business: Year Taxable Income/(Loss) Distribution to Owners
| Year | Taxable income/ (loss) | Distribution to owners |
| 1 | ($50,000) | $0 |
| 2 | ($20,000) | $10,000 |
| 3+ | $75,000 | $20,000 |
Jake expects to be in a marginal tax bracket of 30% for each year. Assume the corporate rate is 21%.
What are the tax and nontax advantages and disadvantages of a flow-through entity and corporate entity? Which entity would be the best option for Jake?
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Management and Cost Accounting
Authors: Colin Drury
8th edition
978-1408041802, 1408041804, 978-1408048566, 1408048566, 978-1408093887
