David Would Like to Organize HOS (A Business Entity)as Either

question 59

Essay

David would like to organize HOS (a business entity)as either an S corporation or as a corporation (taxed as a C corporation)generating a 12 percent annual before-tax return on a $300,000 investment.David's marginal tax rate is 24 percent and the corporate tax rate is 21 percent.David's marginal tax rate on individual capital gains and dividends is 15 percent.HOS will pay out its after-tax earnings every year to either its members or its shareholders.If HOS is taxed as an S corporation, David's business income allocation would be subject to a 3.8 percent net investment income tax (he is a passive investor in the business), and the business income allocation would qualify for the deduction for qualified business income.
a.How much would David keep after taxes if HOS is organized as either an S corporation or a C corporation?
b.What are the overall tax rates (combined owner and entity level)if HOS is organized as either an S corporation or a C corporation?

Evaluate the strategies companies use to defend against antitrust actions.

Differentiate between horizontal, vertical, and conglomerate mergers.

Understand the concept of market dominance and the criteria used to evaluate it.

Identify the influence of corporate takeovers and defenses on corporate strategy and structure.

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Definitions:

Goods and Services

The output of an economy that fulfills consumer needs, with goods being tangible products and services being intangible activities performed for consumers.

Nominal Wage

The amount of money paid to an employee without adjustments for inflation or purchasing power, expressed in current currency terms.

Real Wage

The purchasing power of an individual's earnings, taking into account the effects of inflation.

Aggregate Supply

The cumulative supply of products and services planned for sale by firms in an economy within a specific time period.