How much more tax will logan pay currently

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Problem 1: Logan, a 50 percent shareholder in Military Gear Inc. (MG), is comparing the tax consequences of losses from C corporations with losses from S corporations. Assume MG has a $115,000 tax loss for the year, Logan's tax basis in his MG stock was $157,500 at the beginning of the year, and he received $82,500 ordinary income from other sources during the year. Assuming Logan's marginal tax rate is 24%, how much more tax will Logan pay currently if MG is a C corporation compared to the tax he would pay if it were an S corporation?

Option 1: $0.
Option 2: 6,000
Option 3: 13,800
Option 4: 19,800

Reference no: EM132990267

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