1. Martin would like to organize Smarty Martys as either as an S Corporation or a C corporation generating a 6 percent annual before-tax return on a $600,000 investment. Martys marginal income tax rate is 35 percent and his tax rate on dividends and capital gains is 23.8 percent (including net investment income tax). They will also be eligible to claim the full deduction for qualified business income. Assume Smarty Martys will pay out 50 percent of its after-tax earnings every year as a dividend if it is formed as a C corporation.
   1. How much would Martin keep after taxes if Smarty Martys is organized as either a S Corp or as a C corp (assuming he is allowed to claim the deduction for qualified business income)?
   2. How much would Martin keep after taxes if Smarty Martys is organized as either a S Corp or as a C corp (assuming he is NOT allowed to claim the deduction for qualified business income)?
   3. What is Martins tax obligation for an S Corp if he is a passive investor in Smarty Martys?