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Problem $04-50($LO $04-3)($Static$)$

$[$The following information applies to the questions displayed below.$]$

Amanda would like to organize BAL as either an LLC $($taxed as a sole proprietorship$)$ or a C corporation. In either form, the

entity is expected to generate an $8$ percent annual before$-$tax return on a $$500,000$ investment. Amanda's marginal

income tax rate is $37$ percent, and her tax rate on qualified dividends and net capital gains is $20\%.$ Assume that BAL will

distribute half of its after$-$tax earnings every year as a dividend if it is formed as a C corporation. Assume the income is not

eligible for the QBI deduction. Further, when computing your answers, include the self$-$employment tax $($use a $2\mathrm{.}9\%$

marginal rate for self$-$employment income because Amanda has salary in excess of the wage base limit$)$ but not the

additional Medicare tax or the net investment income tax.

Problem $04-50$ Part b $($Static$)$

b$.$ What is the overall tax rate on BAL's income in the first year if BAL is organized as an LLC or as a C corporation?

Note: Round intermediate calculations to the nearest whole dollar. Round your final answers to $2$ decimal places.