NAME 1. David would like to organize HOS (a business entity) as either an S corporation or as a corporation (taxed as a C corporation) generating a 12 percent annual before-tax return on a $300,000 investment. David's marginal tax rate is 24 percent and the corporate tax rate is 21 percent. David's marginal tax rate on individual capital gains and dividends is 15 percent. HOS will pay out its after-tax earnings every year to either its members or its shareholders. If HOS is taxed as an S corporation, David's business income allocation would be subject to a 3.8 percent net investment income tax (he is a passive investor in the business) and the business income allocation would qualify for the deduction for qualified business income. a. How much would David keep after taxes if HOS is organized as either an S corporation or a C corporation? b. What are the overall tax rates (combined owner and entity level) if HOS is organized as either an S corporation or a C corporation? In its first year of existence (2018) Pine Corp. (a C corporation) reported a loss for tax purposes .of $60,000. In 2019, it reports a $40,000 loss. For 2020, it reports taxable income from operations of $120,000. How much tax will Pine Corp. pay for year 3? Rodger owns 100% of the shares in Trevor Inc., a C corporation. Assume the following for the current year: Trevor Inc.'s pre-tax income = $16,000 Percentage of after-tax earnings retained by Trevor Inc. =0% (i.e. all after-tax earnings distributed) Rodger's dividend tax rate = 15% Given these assumptions, how much cash does Rodger have from the dividend after all taxes have been paid? 4) In 2020, AutoUSA Inc. received $4,600,000 of book income, including $20,000 of interest income from tax-exempt bonds. AutoUSA reported $3,600,000 of regular business expenses. If it made $210,000 of estimated tax payments (prepayments) throughout the tax year, what is its tax due or tax refund when it files its return? 5) For book purposes, ComCorp Inc. reported $18,000 of income from municipal bonds in 2020. It also expensed $10,000 of fines paid to the SEC the same year. What is the total book-tax difference associated with these items? Is it favorable or unfavorable? What amount of the total adjustment is permanent and what amount is temporary? 6) In 2020, Manufacturers, Inc. expensed $120,000 of depreciation for book purposes, but for tax purposes, it deducted $180,000, Manufactures, Inc also sold equipment for $400,000. The book adjusted basis of the equipment sold was $275,000, while the adjusted basis for tax purposes was $200,000. What is the total book-tax difference associated with depreciation and the gain on sale? Is it favorable or unfavorable? What amount of the book-tax difference is permanent and what amount is temporary? 7) In 2020, Webtel Corporation donated $50,000 to a qualifying charity. For the year, it reported taxable income of $310,000, which included the following: the $50,000 charitable contribution (before limitation), a $100,000 dividends received deduction, and a $20,000 net operating loss carryover. What is Webtel Corp.'s charitable contribution deduction?