LiliannaLilianna,

a single taxpayer, operates

aa

coffee shopcoffee shop.

She is considering either continuing the business as a sole proprietorship or reorganizing it as either a C corporation or an S corporation. Her goal is to withdraw

$ 25 comma 000$25,000

of profits from the business annually while minimizing her total tax liability. She expects the business to generate annually

$ 46 comma 000$46,000

of taxable income, all of which qualifies as pass-through income before considering a deductible salary expense.