Question
Maryanne a single taxpayer, operates a mini mart. She is considering either continuing the business as a sole proprietorship or reorganizing it as either a
Maryanne a single taxpayer, operates a mini mart. 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 25,000 of profits from the business annually while minimizing her total tax liability. She expects the business to generate annually 47,000 of taxable income, all of which qualifies as pass-through income before considering a deductible salary expense.
Which business form(s) can best achieve Maryanne goals?
Complete the table to determine the amount of tax for each business form:
Sole | C Corporation | C Corporation | S Corporation | S Corporation | ||||||
Proprietorship | with Salary | with Dividend | with Salary | with Distribution | ||||||
Entity Level: | ||||||||||
Income before salary | ||||||||||
Salary deduction | ||||||||||
Taxable income | ||||||||||
Entity level tax | ||||||||||
Maryanne: | ||||||||||
Pass-through income | ||||||||||
Qualified business income deduction | ||||||||||
Salary income | ||||||||||
Dividend income | ||||||||||
Total income to Maryanne | ||||||||||
Maryannes Tax |
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