Ms. Rankin plans to start a new business venture making widgets. According to her five-year projection, the venture will operate at a loss for two years before becoming profitable. The projections are as follows:

Year 0 Year 1 Year 2 Year 3 Year 4

Net Income/(Loss) $(75,000) $(25,000) $30,000 $90,000 $160,000

Ms. Rankin will contribute building, equipment, and land to the entity. She hopes to find another individual who can help with the management of the business. She also would like this individual to share not more than 40% in the profits of the venture. She does not want to bring in this additional individual until the venture starts making a positive net income. Rankin is uncertain as to the best method in sharing the profits when that time comes? Rankin has come to you for tax planning advice. She would like you to provide advice as to the best entity choice for her new venture. In addition, she needs a planning strategy that best suits her needs when it is time to bring in a partner/shareholder in the future.