• Albert owns 100% of A Corporation, Betty is the sole proprietor of B Company, and Cai is the sole proprietor of C Company.
• Each business generated $500,000 of taxable income and before-tax cash flow.
• A Corporation and B Company produce a product, but C Company provides accounting services.
• A Corporation will distribute all of its after-tax income to Albert.
• All three owners face a 37% marginal tax rate on ordinary income.
• B Company qualifies for the § 199A deduction, but C Company does not because it provides accounting services and its taxable income exceeds the threshold for that deduction.

Assume the tax rate applied to dividend income equals the top 20% net long-term capital gain rate plus the 3.8% net investment income tax rate. The corporate tax rate is 21% and § 199A deduction is 20%.

What will be the values of A Corporation, B Company, and C Company after three years? Assume that each business can reinvest its after-tax cash flow back into the business and that there is no unrealized appreciation of their assets.

	A Corp	B Corp	C Corp
Initial investment	5,000,000	5,000,000	5,000,000
Taxable income to owners in year 1
After-tax cash flow for year 1
Investment at end of year 1
Taxable income to owners in year 2
After-tax cash flow for year 2
Investment at end of year 2
Taxable income to owners in year 3
After-tax cash flow for year 3
Investment at end of year 3