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Question - 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 10 percent annual before-tax return on a $720,000 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.
Required - 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?
Sales were $15 million and actual warranty expenditures were $20,000 for the first year of selling the product. What amount should Right report as a liability at the end of the year?
What are the sections that make-up a multiple-step income statement? How is this different from the single step income statement format?
What is the amount of the gross profit? Compute the gross profit percentage (gross profit divided by sales). Will the income statement necessarily report a net income? Explain"
In addition, she incurs related legal fees of $75,000. Determine the amount that Mercedes can deduct, and classify it as a deduction for or adeduction from AGI.
He covers all of the household expenses of his mother Barbara who lives down the street. Barbara has gross income of $4,500. Can Ned file as head of household
John and Sally Claussen are considering the purchase of a hardware store from John Duggan. What is the maximum amount the Claussens should pay John Duggan
Recommend a fraud prevention plan for this organization. Determine the positive or negative consequences that the fraud prevention plan might have on employees.
Supporters of the estate and gift tax argue
Mickelle Bride, the CEO of Harmony Organ, was very excited about the new methods of looking at costs you showed her previously (fixed cost, variable cost, and semi-variable cost, the importance of cost, visual fit, high-low, and least-squares regr..
Dunn Corporation's taxable income is less than $40,000. The corporation is not eligible for the AMT small corporation exemption. The CPA preparing the return does not calculate the AMT because he knows that taxable income is less than the AMT stat..
What risks does Emerald face by not upholding his responsibility for the collection and payment of employment taxes? Explain
It is now December 31, 2011, and Fortune has provided legal services as planned. What adjusting entry should Fortune make to account for the work performed from October 1 through December 31, 2011?
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