Jeffery that MCC will have net income of $100,000 in its first year of operations before considering any payments to him. If things go as planned, his projections show that the business net income will approximately double each year for the next 10 years. Assume his marginal ordinary income tax rate is 37%, her marginal FICA rate on employee compensation is 1.45%, her marginal self- employment tax rate is 2.9%, and any employee compensation or self-employment income he receives is subject to the .9% additional Medicare tax.

a. conducted MCC as a C corporation and she received a salary of $25,000. All business net income is paid to his in the form of a dividend.

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S corporation generates most after tax cash flows as per the workings shown in ... View the full answer