Mackenzie is considering conducting her business, Mac561, as either a single-member LLC or an S corporation. Assume her marginal ordinary income tax rate is 37 percent, her marginal FICA rate on employee compensation is 1.45 percent, her marginal self-employment tax rate is 2.9 percent, and any employee compensation or self-employment income she receives is subject to the 0.9 percent additional Medicare tax. Also assume Mac561 generated $200,000 of business income before considering the deduction for compensation Mac561 pays to Mackenzie and Mackenzie can claim the qualified business income deduction on Mac561s business income. Determine Mackenzies after-tax cash flow from the entitys business income and any compensation she receives from the business under the following assumptions: (Round intermediate calculations and your final answers to the nearest whole dollar.)

a. Mackenzie conducted Mac561 as a single-member LLC.

After-tax cash flow= _______

b. Mackenzie conducted Mac561 as an S corporation and she received a salary of $100,000. All business income allocated to her is also distributed to her.

After-tax cash flow= ___

c. Mackenzie conducted Mac561 as an S corporation and she received a salary of $20,000. All business income allocated to her is also distributed to her.

After-tax cash flow= ___

d-1. Which entity/compensation combination generated the most after-tax cash flow for Mackenzie?

Single member LLC= ______

d-2. What are the primary contributing factors favoring this combination? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answers and double click the box with the question mark to empty the box for a wrong answers. Any boxes left with a question mark will be automatically graded as incorrect.)

• a small amount of payroll tax on the low salaryunanswered
• a relatively large QBI deduction because of the low salaryunanswered
• a relatively small QBI deduction because of the low salaryunanswered
• a huge amount of payroll tax on the low salaryunanswered
• none of the relatively large business income allocation was subject to FICA or self-employment tax.