Megan operates a housecleaning business as a sole proprietorship. She oversees a team of $10$ cleaning personnel, markets the business, and provides supplies and equipment. The business has been generating net taxable profits of $$65,000$ per year, before considering the QBI deduction. As a sole proprietor, Megan qualifies for the $20$ percent deduction, reducing taxable income from the business to $$52,000.$

Required:

a$.$ Assume that Megan's marginal tax rate on ordinary income is $35$ percent and that she has no pressing need for cash flow from this business. Should Megan consider incorporating and operating the business through a $C$ corporation? Assume that $C$ Corporations are subject to a $21\%$ tax rate. Fill the below table to justify your answers. $($Ignore any payroll or self$-$employment tax considerations.$)$

$\backslash$table$[[$Income tax liability if operated as a C corporation$],[$Income tax savings$],[$Should Megan consider incorporating and operating the business through a C corporation?$]]$

b$.$ How would your conclusion in part a change if Megan's marginal tax rate were only $28$ percent?

Annual tax savings will

to