Question
Mackenzie is considering conducting her business, Mac561, as either a single-member LLC or as an S corporation. Assume her marginal ordinary income tax rate is
Mackenzie is considering conducting her business, Mac561, as either a single-member LLC or as 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 Page 15-31self-employment income she receives is subject to the .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 full 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:
Mackenzie conducted Mac561 as a single-member LLC.
How much after-tax cash flow?
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