Karen, Single with $10,400 in Total Deductions, Wants to Set

question 100

Essay

Karen, single with $10,400 in total deductions, wants to set up a business. She will use either a sole proprietorship or incorporate as a regular corporation. She expects the business to earn $45,000 after all expenses and payments to Karen except for federal taxes. Karen will take $25,000 from the business for living expenses (as a distribution from a sole proprietorship or a salary from a corporation). Considering only income taxes for 2017, should she establish the business as a C corporation or as a sole proprietorship?

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Definitions:

Mental Illness

A broad range of conditions that affect mood, thinking, and behavior, and can impact day-to-day functioning and relationships.

Institutionalized

Established as a norm or convention within an organization or culture, or adapted to living in an institution.

Gun Violence

refers to incidents where firearms are used to inflict harm or death, often highlighting issues of public health and safety.

Generalized Anxiety Disorder

A psychological condition characterized by excessive, uncontrollable, and often irrational worry about everyday things.