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Part 1

Double taxation and implied cost of limited liabilityYou are single and contemplating starting a new business as either a sole proprietorship or a corporation. On the one hand you really value the limited liability provided by incorporating, but on the other hand you are not fond of the double taxation issue faced by owners of corporations. To help you decide, find the final after-tax income you would have from

$580,000

of business taxable income if you organize your business as a proprietorship vs a corporation. Assume this is your only income after adjustment for self-employment taxes, the Qualified Business Incomededuction, the standard deduction, and any other adjustments to income prior to the calculation of taxes owed . Based on your findings, what's the implied cost of limited liability afforded by incorporating? Use a corporate tax rate of 21%.

Click on the following icon for tax rate schedule for individual taxpayers

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Part 1

If you organize your business as a

corporation,

and the corporation's after-tax income is paid as dividend to you, the final after-tax income you would have from

$580,000

of business taxable income is

(Round to the nearest integer.)

Note:

The corporation's after-tax income is the amount available for you as dividend income.