Grace is considering organizing her business, Basswood, as either in LLC, S corporation, or C corporation....

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Grace is considering organizing her business, Basswood, as either in LLC, S corporation, or C corporation. Assume the following in answering the questions below. Pre-tax earnings: $100,000 Marginal tax rate on ordinary income: 35 percent Net self-employment income: 92.35 percent of gross self-employment income Marginal self-employment tax rate: 2.9 percent Marginal FICA rate on employee compensation: 1.45 percent Additional Medicare tax rate (on self-employment or employee compensation): 0.9 percent Marginal tax rate on dividends: 20 percent Net investment income tax rate: 3.8 percent Qualified business income (QBI) deduction rate: 20 percent of QBI (Basswood is eligible) Salary to owner (if organized as S corporation): $20,000 C corporation tax rate: 21 percent Amount distributed as a dividend (if a C corporation): 30 percent of after-tax earnings If Grace organizes Basswood as a single member LLC, what is her after-tax cash flow and overall tax rate? Grace is considering organizing her business, Basswood, as either in LLC, S corporation, or C corporation. Assume the following in answering the questions below. Pre-tax earnings: $100,000 Marginal tax rate on ordinary income: 35 percent Net self-employment income: 92.35 percent of gross self-employment income Marginal self-employment tax rate: 2.9 percent Marginal FICA rate on employee compensation: 1.45 percent Additional Medicare tax rate (on self-employment or employee compensation): 0.9 percent Marginal tax rate on dividends: 20 percent Net investment income tax rate: 3.8 percent Qualified business income (QBI) deduction rate: 20 percent of QBI (Basswood is eligible) Salary to owner (if organized as S corporation): $20,000 C corporation tax rate: 21 percent Amount distributed as a dividend (if a C corporation): 30 percent of after-tax earnings If Grace organizes Basswood as a single member LLC, what is her after-tax cash flow and overall tax rate?

Answer rating: 100% (QA)

AfterTax Cash Flow and Overall Tax Rate for Grace as a SingleMember LLC Step 1 Calcul... View the full answer