Paula is starting a new business and deciding whether to organize it as an LLC or a C corporation. She projects that the business will have a net loss for tax purposes of $200,000 in 2022 (the first year of operations). She then expects the business to have taxable income of $10,000 in 2023 and taxable income of $300,000 in 2024. The following assumptions apply:

1. Paula's individual marginal tax rate is 37% and the corporate tax rate is 21%.
2. Assume a discount rate of 5%
3. Paula is not subject to any limitations on deducting flow-through losses on her individual return
4. The business will not distribute any money to Paula during these three years
5. Ignore the QBI deduction and self-employment taxes

Calculate the NPV of the tax cost or benefit if she organizes as an LLC or if she organizes as a C corporation. Enter any tax COST as a negative number; enter any tax BENEFIT as a positive number.

HINT: If you need to carry forward any net operating losses, recall the NOL carryover rules!

Tax cost or benefit if LLC:

Tax cost or benefit if C Corporation: