Sanjay would like to organize HOS (a business entity) as either an S corporation or as a corporation (taxed as a C corporation) generating a 12 percent annual before-tax return on a $300,000 investment. Sanjay's marginal tax rate is 24 percent and the corporate tax rate is 21 percent. Sanjay's marginal tax rate on individual capital gains and dividends is 15 percent. HOS will pay out its after-tax earnings every year to either its members or its shareholders. If HOS is taxed as an S corporation, the business income allocation would qualify for the deduction for qualified business income (assume no limitations on the deduction). Assume Sanjay does not owe any additional Medicare tax or net investment income tax.

(1) How much would Sanjay keep after taxes if HOS is organized as either an S corporation or a C corporation?

(2) What are the overall tax rates (combined owner and entity level) if HOS is organized as either an S corporation or a C corporation?