What is the overall tax rate on SHO income

Assignment Help Accounting Basics
Reference no: EM132642099

Question - 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 8 percent annual before-tax return on a $260,000 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 3.8 percent net investment income tax on dividends and capital gains she recognizes. If Andrea organizes SHO as an LLC, Andrea 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 full 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. (Do not round intermediate calculations and round your final answers to the nearest whole dollar.)

Required - What is the overall tax rate on SHO's income in the first year if SHO is organized as an LLC or as a C corporation? (Round your final answers to 2 decimal places.)

Reference no: EM132642099

Questions Cloud

What is amount of tax Jacob will owe on income allocation : Jacob is a member of WCC (an LLC taxed as a partnership). What is the amount of tax Jacob will owe on the income allocation
Estimate for a requirement that is commercially available : Estimate for a requirement that is commercially available. Chose the category below that they will most likely use while developing the estimate.
What pork-barrel legislation represents : Describe what incumbency means, what a constituency is, and what pork-barrel legislation represents.
Prepare the balance sheet for drammel design studio : Prepare the balance sheet for Drammel Design Studio as of December 31?, 2018. ?(If a box is not used in the table leave the box? empty)
What is the overall tax rate on SHO income : Andrea would like to organize SHO as either an LLC (taxed as a sole proprietorship) or a C corporation. What is the overall tax rate on SHO income
Discuss the recent public policy decisions : Discuss the recent public policy decisions made in Texas with respect to abortion. Find at least one Op-Ed on the issue and explain
Showing the movement on the consolidated retained earnings : Showing the movement on the consolidated retained earnings attributable to Company X for the year to 30th September 2016.
Compute the amount of goodwill impairment : Compute the amount of goodwill impairment (if any) that Pet must include in the Consolidated Income Statement for 2020
What the differences and similarities between ROE and ROA : Question - What are the differences and similarities between ROE and ROA? Give a numerical example to illustrate your points

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

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