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[The following information applies to the questions displayed below] Andrea would like to organize SHO as either an LLC (taxed as a sole proprietorship)

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[The following information applies to the questions displayed below] Andrea would like to organize SHO as either an LLC (taxed as a sole proprietorship) or a C corporation In either form, the entity is expected to generate an 11 percent annual before-tax return on a $620,000 investment Andrea's marginal income tax rate is 35 percent and her tax rate on dividends and capital gains is 15 percent. Andrea will also pay a 38 percent net investment income tax on dividends and capital gains she recognizes. If Andrea organizes SHO as an LLC, she will be required to pay an additional 2.9 percent for self-employment tax and an additional 0.9 percent for the additional Medicare tax. Further, she is eligible to claim the deduction for qualified business income. Assume that SHO will pay out all of its after-tax earnings every year as a dividend if it is formed as a C corporation

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