Blue Eyed Beauty Supply is the talk of the town. When Elaine started her business, she had no idea it would evolve to be the number one supplier of cosmetology supply in the region. While her business has been successfully operating as a sole proprietorship for many years, her legal counsel has urged her to form a separate legal entity for a variety of nontax reasons. Elaine will form an LLC but has come to you for advice as to which tax classification is best positioned to pay the least overall tax. She has provided you with her 2022 tax data and the following assumptions to develop an Excel model: Elaine is Single and her sole source of income is from her business activities . It is expected that her business meets the definition of a trade or business for Qualified Business Income deduction purposes The business generates $140,000 of net income before contemplating any taxes Elaine is assuming a reasonable compensation amount of $50,000 As a C Corporation, the business will dividend out all earnings after taxes are paid to Elaine Required: 1. Complete the "The tax is:" column for the filing status table using a formula. 2. Complete the Schedule C tax calculations using VLOOKUP formulas to the 2022 tax brackets. 3. Complete the S Corporation tax calculations using VLOOKUP formulas to the 2022 tax brackets. 4. Complete the C Corporation tax calculations using VLOOKUP formulas to the 2022 tax brackets. A B D E F G H 2 Blue Eyed Beauty Supply is the talk of the town. When Elaine started her business, she had no idea it would evolve to be the number one supplier of cosmetology supply in the region. While her business has 3 been successfully operating as a sole proprietorship for many years, her legal counsel has urged her to form a separate legal entity for a variety of nontax reasons. Elaine will form an LLC but has come to you 4 for advice as to which tax classification is best positioned to pay the least overall tax. She has provided you with her 2022 tax data and the following assumptions to develop an Excel model: 5 6 7 Elaine is Single and her sole source of income is from her business activities It is expected that her business meets the definition of a trade or business for Qualified Business Income deduction purposes 8 The business generates $140,000 of net income before contemplating any taxes 9 Elaine is assuming a reasonable compensation amount of $50,000 10 As a C Corporation, the business will dividend out all earnings after taxes are paid to Elaine 11 12 13 Required: 14 1. Complete the "The tax is:" column for the filing status table using a formula. 15 2. Complete the Schedule C tax calculations using VLOOKUP formulas to the 2022 tax brackets. 16 3. Complete the S Corporation tax calculations using VLOOKUP formulas to the 2022 tax brackets. 17 4. Complete the C Corporation tax calculations using VLOOKUP formulas to the 2022 tax brackets. 18 19 (HINT: Use the TRUE logical value for VLOOKUP formulas) Schedule X - Single 20 21 22 If taxable income is over: But not over: The tax is: Plus: 23 $ $ 10,275.00 $ 10% 24 25 $ 10,275.00 $ 41,775.00 $1,027.50 12% $ 41,775.00 $ 89,075.00 22% 26 $ 89,075.00 $ 170,050.00 24% 27 $ 170,050.00 $ 215,950.00 32% 28 $ 215,950.00 $ 539,900.00 35% 29 $ 539,900.00 $ 37% 30 30 31 32 33 Schedule C Income 34 Self-Employment Tax 35 36 Less: 50% Self-Employment Tax 37 AGI 38 Less: Standard Deduction 39 Less: QBI 40 Taxable Income: 41 42 If taxable income is over: 43 But not over: 44 The tax is: 45 Plus tax percentage: 46 Plus tax amount: 47 Ordinary Personal Income Tax 48 49 Overall Total Tax 50 51 Overall Tax Rate 52 Schedule C $ 140,000.00 $ 12,950.00 A 54 S Corporation 55 W-2 Income $ 56 Less: Employee Share of Payroll Taxes 57 Net W-2 Compensation 58 59 S Corporation Income Before Payroll Tax $ 60 Less: S Corporation Payroll Tax $ 61 Other Income - S Corp K-1 es $ 62 63 AGI 64 Less: Standard Deduction 65 Less: QBI 66 Taxable Income: 67 68 If taxable income is over: 69 But not over: Plus tax percentage: 70 The tax is: 71 72 Plus tax amount: 73 74 Ordinary Personal Income Tax 75 Overall Total Tax 76 77 Overall Tax Rate 78 B 50,000.00 90,000.00 3,825.00 86,175.00 12,950.00 C 79 80 81 W-2 Income A C Corporation $ 82 Less: Employee Share of Payroll Taxes 83 Net W-2 Compensation B 50,000.00 84 85 C Corporation Income Before Payroll Tax $ 90,000.00 86 Less: C Corporation Payroll Tax 87 C Corporation Taxable Income 88 C Corporation Income Tax 89 90 AGI 91 Less: Standard Deduction $ 12,950.00 92 Taxable Income 93 94 If taxable income is over: 95 But not over: 96 The tax is: 97 Plus tax percentage: 98 Plus tax amount: 99 100 Ordinary Personal Income Tax 101 Dividend From C Corporation 102 Qualified Dividends Tax 103 104 Total Personal Tax 105 106 Overall Total Tax 107 108 Overall Tax Rate 109 C