Comparison of Tax Entities.

a. Keith Thomas and Trent Brooks began a new consulting business on January 1, 2023. They organized the business as a C corporation, KT, Inc. During 2023, the corporation was successful and generated revenues of \($2\) million. KT had operating expenses of \($800,000\) before any payments to Keith or Trent. During 2023, KT paid dividends to Keith and Trent in the amount of \($350,000\) each. Assume that Keith’s wife earned \($130,000\) from her job, they file a joint return, have itemized deductions of \($40,000,\) and have no children. Compute the total tax liability of KT, Inc. and Keith and his wife for 2023. Ignore the net investment income tax.

b. Instead of organizing the consulting business as a C corporation, assume Keith and Trent organized the business as a limited liability company, KT, LLC. KT made a distribution of \($350,000\) each to Keith and Trent during 2023. Compute the total tax liability of KT, LLC and Keith for 2023. Ignore any additional tax on net investment income, and ignore the qualified business income deduction.