Required information Problem 15-51 (LO 15-3) (Algo) [The following information applies to the questions displayed below] Sandra would like to organize LAB (a legal corporation) as elther an 5 corporation or a C corporation for tax purposes. in either form, the entity is expected to generate an 8 percent annual before-tax return on a $950.000 investment. Sandra's marginal income tax rate is 37 percent and her tax rate on qualified dividends and net capital gains is 20 percent LAB 's income is not qualfied busines' income (GBI), so Sandra is not allowed to claim the QBI deduction. Assume that LAB wil! distribute all of its earnings after entity-level taxes every year ignore the additional Medicare tax and the net investment income tax when computing your answers Note: Round your intermediate computations to the nearest whole dollar amount. Problem 15-51 Part a (Algo) . How much cash after taxes would Sandra receive from her investment in the first year if LAB is organized as either on S corporation or a C corporation? Required information Problem 15.51 (LO 15-3) (Algo) The following information applies to the questions displayed below] Sandra would like to organize LAB (a legal corporation) as either an S corporation or a C corporation for tax purposes. In either form, the entity is expected to generate an 8 percent annual before-tax return on a $950,000 investment. Sandra's marginal income tax rate is 37 percent and her tax rate on qualified dividends and net capital gains is 20 percent LAB's income is not qualified business income (QBI), so Sandra is not allowed to claim the QBi deduction. Assume that LAB will distribute all of its earnings after entity-level taxes every year. Ignore the additional Medicare tax and the net investment income tax when computing your answers. Note: Round your intermediate computations to the nearest whole dollar amount. Problem 15-51 Part b (Algo) b. What is the overall tax rate on LAB's income in the first year if LAB is organized as an S corporation or as a C corporation? Note: Round your final answers to 2 decimal places. Problem 15-61 (LO 15-3) (Algo) Dave and his friend Stewart each owns 50 percent of KBS, During the year, Dave received $98,000 compensation for services he performed for KBS during the year. He performed a significant amount of work for the entity, and he was heavily involved in managerment decisions for the entity (he was not a passive investor in KBS). After deducting Dave's compensation, KBS reported taxable income of $39,200 How much FCA and/or self-employment tax is Dave required to pay on his compensation and his share of the KBS income if KBS is formed as a C corporation, an S corporation, or a limited liability company (taxed as a partnership) (ignore the 09 percent additional Medicare tax)? How much FICA tax would the entity be required to pay on the compensation paid to Dave? Note: Do not round any percentage calculations. Round other intermediate calculations and final onswers to the nearest whole dollar amount
