a$.$ For all entity types, the business reports $$22,000$ of business income before deducting compensation paid to Amy and payroll taxes SHO pays on Amy's behalf.

b$.$ All entities use the cash method of accounting.

c$.$ If Amy organizes SHO as an S corporation or a C corporation, SHO will pay Amy a $$5,000$ annual salary $($assume the salary is reasonable for purposes of this problem$).$ For both the S and C corporations, Amy will pay $7\mathrm{.}65$ percent FICA tax on her salary and SHO will also pay $7\mathrm{.}65$ percent FICA tax on Amy's salary $($the FICA tax paid by the entity is deductible by the entity$).$

d$.$ Amy's marginal ordinary income tax rate is $35$ percent, and her income tax rate on qualified dividends and net capital gains is $15$ percent.

e$.$ Amy's marginal self$-$employment tax rate is $15\mathrm{.}3$ percent.

$4.$ Amy pays a $.9$ percent additional Medicare tax on salary and net earnings from self$-$employment $($i$.$e$.,$ her salary and net earnings from self$-$employment are over the threshold for the tax$).$

$9.$ Amy pays a $3\mathrm{.}8$ percent net investment income tax on dividends and net capital gains $($i$.$e$.,$ AGl on her joint tax return is over the threshold by more than any net investment income she receives$).$

h$.$ Assume that for purposes of the qualified business income deduction, the business income is not from a specified service and neither the wage$-$based limitation nor the taxable income limitation applies to limit the deduction.

If SHO is formed as an $S$ corporation or a C corporation. SHO will distribute all of its eamings after paying entity level taxes and after deducting salary and related FICA taxes paid to Amy.

Fill in the cells in the table below to identify cash flows associated with the income from the business if the business is formed as an LLC $($sole proprietorship$).$ S corporation, or C corporation for tax purposes. Enter cash outflows as negative numbers.

$\backslash$table$[[$Cash flow,$\backslash$table$[[$LLC $($Sole$],[$Proprietorship$)]],\backslash$table$[[$S$],[$corporation$]],\backslash$table$[[$C$],[$corporation$]]],[$Business income,$5,22,000,8,22,000,8,22,000],[$FICA taxes paid by Amy,,$0o.,,(383)2,,(383)2],[$FICA taxes paid by BHO,,$0(,,(383)(2),,(383)(2)],[$Federal income tax paid by SHO,,$0(v),,0(4),,0$