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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 $$650,000$ 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.

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 corporation?

Note: Round your final answers to $2$ decimal places.