How much cash after taxes would sandra receive

Assignment Help Accounting Basics
Reference no: EM133013856

Problem - Sandra would like to organize BAL as either an LLC (taxed as a sole proprietorship) or a C corporation. In either form, the entity is expected to generate an 13 percent annual before-tax return on a $570,000 investment. Sandra's marginal income tax rate is 37 percent and her tax rate on dividends and capital gains is 23.8 percent (including the 3.8 percent net investment income tax). If Sandra organizes BAL 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. BAL's income is not qualified business income (QBI) so Sandra is not allowed to claim the QBI deduction. Assume that BAL will distribute all of its after-tax earnings every year as a dividend if it is formed as a C corporation.

a. How much cash after taxes would Sandra receive from her investment in the first year if BAL is organized as either an LLC or a C corporation?

b. What is the overall tax rate on BAL's income in the first year if BAL is organized as an LLC or as a C corporation?

Reference no: EM133013856

Questions Cloud

What is the discount rate and required rate of return used : If the price of Lowe's preference shares is R30 and the company pays a dividend of R2, what is the discount rate/required rate of return used by the company
NURS 489 Synthesis of Complex Nursing Assignment : NURS 489 Synthesis of Complex Nursing Assignment Help and Solution, Washington Adventist University - Assessment Writing Service
What is the interest rate and what is the coupon rate : Question - What is the interest rate and what is the coupon rate? What is the difference between them and how are they related to each other
Determine the balances in the accounts receivable : Recovery of bad debts previously written off as uncollectible 24,000. Determine the balances in the Accounts receivable and Allowance for doubtful accounts
How much cash after taxes would sandra receive : How much cash after taxes would Sandra receive from her investment in the first year if BAL is organized as either an LLC or a C corporation
Procedure in conducting a training programme : Discuss the step by step procedure in conducting a training programme, starting with Training Need Analysis by identifying the right training programme for your
Can you afford to start up : In Wikibooks' Sustainable Business: "Can You Afford to Start Up?" one of the biggest cause of business failure is underestimating the start-up costs plus the am
Undertake a self-evaluation of emotional intelligence : To begin this part, read the following phone message left on your phone, and then complete the task that follows:
Graphing calculator assignment : Graphing Calculator Assignment - Discussing the assignment requirements with others is a reasonable thing to do, and an excellent way to learn.

Reviews

Write a Review

Accounting Basics Questions & Answers

  Discuss whether this plan would be considered compensatory

The purchase price is set at the market price on the date purchased and no commission is charged. Discuss whether this plan would be considered compensatory.

  If 2400 square centimeters of material is available to make

1 a fence 2 feet tall runs parallel to a tall building at a distance of 7 feet from the building. what is the length of

  You have been hired as a consultant for pristine urban-tech

you have been hired as a consultant for pristine urban-tech zither inc. putz manufacturers of fine zithers. the market

  The bonds pay semiannual interest on may 1 and november 1

lance co. purchased 24000 of 8 15-year bergen county bonds on july 12 2012 directly from the county at par value. the

  Discuss potential problems creates and propose alternative

The commingling of legal and contingent liabilities exists under current GAAP accounting. Discuss potential problems this creates and propose alternatives

  Total stockholders equity

total stockholders equity representsa.a claim to specific assets contributed by the owners.b.the maximum amount that

  Brandt cpas has obtained big-bucks a new publicly-held

brandt cpas has obtained big-bucks a new publicly-held client. big-bucks has various accounting-related needs that

  Travis transfers land with a fair market value of 125000

1. which of the following is not a corporate organizational expenditure that may be amortized?a. the cost of

  What is the differential revenue of producing Product D

Carmen Co. can further process Product J to produce Product D. What is the differential revenue of producing Product D

  Calculate the weighted average cost of capital

Calculate the weighted average cost of capital (WACC) if the ratio is as follows: Debt 30 percent. Preferred share 20 percent. Equity 50 percent

  Separation of duties and general control procedures

Separation of Duties and General Control Procedures. You are engaged to examine the financial statements of Horizon Incorporated.

  Describe elements and purpose of each financial statement

Discuss the impact of accounting transactions in financial statements. Describe the elements and purpose of each financial statement.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd