Your friend Curlow often asks you about tax avoidance strategies. He heard that he can reduce his taxes by putting his investments in a corporation and asks you whether this is true. Explain to Carlos the income tax issues surrounding this strategy (Select all that apply) DA The corporation would have to be treated as a corporation. If it were treated as an C corporation, the investment income would pass through to Carlos and be taxed at the same rate as if he held the investments himself B. The corporation would have to be treated as a corporation. If it were treated as an Scorporation, the investment income would pass through to Carlos and be taxed at the same rate as if he held the investments himself C. Although corporation income is double taxed (once at the corporate level and again at the shareholder level), the two tax rates may be less than Carlos marginal tax rate on ordinary income. The first part of the double tax is the 21% corporate income tax, which may be less than or greater than Carlos' marginal tax rate on ordinary income. The second part of the double tax is the 0%, 15% or 20% tax rate on an individuals qualified dividends, which is less than Carlos marginal tax rate on ordinary income. This second tax at the shareholder level can be deferred if the corporation does not pay a dividend to Carlos for many years, thereby allowing the investments to grow at a greater rate in the meantime D. I Caros investments generate long-term capital gains rather than ordinary income, there would be a tax benefit in holding his investments in a corporation Carios could reduce his income taxes by transferring ownership of his investments to his corporation, but such is not always true. The corporation would have to be treated as a corporation. It were treated as an Scorporation, the investment income would pass through to Carlos and be taxed at the same rate as if he held the Investments himet Although corporation income is double taxed (first at the corporate level and again at the shareholder level), the two tax rates may be less than Carlos' marginal tax rate on ordinary income. The first part of the double tax is the 21% corporate income tax, which may be less than or greater than Carlos' marginal tax rate on ordinary Income. The second part of the double tax is the 0%, 15% or 20% tax rate on an individuals qualified dividends, which is less than Carlos' marginal tax rate on ordinary income. This second tax at the shareholder level can be deferred if the corporation does not pay a dividend to Carlos for many years, thereby allowing the vestments to grow at greater role in the meantime, Carlos investments generale long term capital gains rather than ordinary income, there would not be a tax benefit in holding his investments in a c corporation. Such investment income would be taxed to the corporation at a 21% rate but would be taxed at a 0%, 15% of 20% rate if Carlos were to own the investment in Even without the second part of the double tax, the tax effect is heavier when holding the investments in a C corporation. If Carlos investments generate qualified dividends, there may be a tax benefit for holding his investments in a corporation since only half of them will be taxed at the 21% rate due to the Id ib Your friend Curlow often asks you about tax avoidance strategies. He heard that he can reduce his taxes by putting his investments in a corporation and asks you whether this is true. Explain to Carlos the income tax issues surrounding this strategy (Select all that apply) DA The corporation would have to be treated as a corporation. If it were treated as an C corporation, the investment income would pass through to Carlos and be taxed at the same rate as if he held the investments himself B. The corporation would have to be treated as a corporation. If it were treated as an Scorporation, the investment income would pass through to Carlos and be taxed at the same rate as if he held the investments himself C. Although corporation income is double taxed (once at the corporate level and again at the shareholder level), the two tax rates may be less than Carlos marginal tax rate on ordinary income. The first part of the double tax is the 21% corporate income tax, which may be less than or greater than Carlos' marginal tax rate on ordinary income. The second part of the double tax is the 0%, 15% or 20% tax rate on an individuals qualified dividends, which is less than Carlos marginal tax rate on ordinary income. This second tax at the shareholder level can be deferred if the corporation does not pay a dividend to Carlos for many years, thereby allowing the investments to grow at a greater rate in the meantime D. I Caros investments generate long-term capital gains rather than ordinary income, there would be a tax benefit in holding his investments in a corporation Carios could reduce his income taxes by transferring ownership of his investments to his corporation, but such is not always true. The corporation would have to be treated as a corporation. It were treated as an Scorporation, the investment income would pass through to Carlos and be taxed at the same rate as if he held the Investments himet Although corporation income is double taxed (first at the corporate level and again at the shareholder level), the two tax rates may be less than Carlos' marginal tax rate on ordinary income. The first part of the double tax is the 21% corporate income tax, which may be less than or greater than Carlos' marginal tax rate on ordinary Income. The second part of the double tax is the 0%, 15% or 20% tax rate on an individuals qualified dividends, which is less than Carlos' marginal tax rate on ordinary income. This second tax at the shareholder level can be deferred if the corporation does not pay a dividend to Carlos for many years, thereby allowing the vestments to grow at greater role in the meantime, Carlos investments generale long term capital gains rather than ordinary income, there would not be a tax benefit in holding his investments in a c corporation. Such investment income would be taxed to the corporation at a 21% rate but would be taxed at a 0%, 15% of 20% rate if Carlos were to own the investment in Even without the second part of the double tax, the tax effect is heavier when holding the investments in a C corporation. If Carlos investments generate qualified dividends, there may be a tax benefit for holding his investments in a corporation since only half of them will be taxed at the 21% rate due to the Id ib