Maryanne, a single taxpayer, operates an internet business. She is considering either continuing the business as...

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Maryanne, a single taxpayer, operates an internet business. She is considering either continuing the business as a sole proprietorship or reorganizing it as either a C corporation or an S corporation. Her goal is to withdraw $15,000 of profits from the business annually while minimizing her total tax liability. She expects the business to generate annually $53,000 of taxable income, all of which qualifies as pass-through income before considering a deductible salary expense. View the information. Requirement Which business form(s) can best achieve Maryanne's goals? Complete the table to determine the amount of total tax for each business form. Start with the entity level, then determine Maryanne's tax and finally the total tax. (Use parentheses or a minus sign for numbers to be subtracted. Complete all input fields. For entries with a $0 balance, make sure to enter a 0 in the appropriate column. For simplification purposes, please use a 22% tax rate to calculate the tax on Maryanne's ordinary income; do not use the tax rate schedules.) Entity Level: Income before salary Salary deduction Taxable income Entity level tax Maryanne: Pass-through income Qualified business income deduction Salary income Dividend income Total income to Maryanne Maryanne's tax Sole Proprietorship $ 53,000 $ 0 C Corporation with Salary 53,000 $ 0 $ 53,000 15000 0 53000 $ 53,000 $ (15,000) 38,000 $ 7,980 $ 38000 0 C Corporation S Corporation with Dividend with Salary 15,000 0 15,000 $ 53,000 $ 0 53,000 $ 11,130 $ 53000 $ 0 0 15,000 15,000 53,000 $ (15,000) 38,000 $ S Corporation with Distribution 0 $ 38,000 $ 15,000 0 53000 53,000 0 53,000 0 53,000 0 0 15000 53000 Maryanne, a single taxpayer, operates an internet business. She is considering either continuing the business as a sole proprietorship or reorganizing it as either a C corporation or an S corporation. Her goal is to withdraw $15,000 of profits from the business annually while minimizing her total tax liability. She expects the business to generate annually $53,000 of taxable income, all of which qualifies as pass-through income before considering a deductible salary expense. View the information. Requirement Which business form(s) can best achieve Maryanne's goals? Complete the table to determine the amount of total tax for each business form. Start with the entity level, then determine Maryanne's tax and finally the total tax. (Use parentheses or a minus sign for numbers to be subtracted. Complete all input fields. For entries with a $0 balance, make sure to enter a 0 in the appropriate column. For simplification purposes, please use a 22% tax rate to calculate the tax on Maryanne's ordinary income; do not use the tax rate schedules.) Entity Level: Income before salary Salary deduction Taxable income Entity level tax Maryanne: Pass-through income Qualified business income deduction Salary income Dividend income Total income to Maryanne Maryanne's tax Sole Proprietorship $ 53,000 $ 0 C Corporation with Salary 53,000 $ 0 $ 53,000 15000 0 53000 $ 53,000 $ (15,000) 38,000 $ 7,980 $ 38000 0 C Corporation S Corporation with Dividend with Salary 15,000 0 15,000 $ 53,000 $ 0 53,000 $ 11,130 $ 53000 $ 0 0 15,000 15,000 53,000 $ (15,000) 38,000 $ S Corporation with Distribution 0 $ 38,000 $ 15,000 0 53000 53,000 0 53,000 0 53,000 0 0 15000 53000

Answer rating: 100% (QA)

To determine which business forms can best achieve Maryannes goals we need to calculate the total ta... View the full answer