Tax Calculation.

Bob, a single person, is the sole owner of a business that he anticipates will have $212,000 in net taxable income per year. He is trying to decide whether to organize the business as an LLC or a C-Corporation. His attorney informed him that hed have similar liability protection with either entity and so he is asking you about the tax consequences. Calculate the total income tax consequences for both Bob and the Business assuming all income flows through to Bob if its an LLC and if taxed as a corporation then all income after taxes is paid out as a dividend to Boband then draw a conclusion as to which entity has a better tax result. Assume this is Bobs only income and that the first $12,000 of income attributable to Bob (whether as flow through income or as a dividend) is exempt from tax by Bobs standard deduction. Use the tax calculation tables in Packet (part 1) to determine the total tax and decide which entity results in a lower income tax liability.