Loretta Plans to Start a Small Business,operated Through a Corporation

question 5

Multiple Choice

Loretta plans to start a small business,operated through a corporation.In year 0,she expects the corporation to generate a loss of $100,000.Subsequently,she expects the corporation to be profitable,and projects profit of $150,000 in year 1,and $250,000 in year 2.Loretta's personal marginal tax rate on ordinary income is 37%.Using Appendix A and a 10% discount rate,calculate the present value of expected tax savings and costs on the business earnings for the first 3 years of operations if the business makes an S corporation election.Assume the excess business loss limitation does not apply.

• A)$52,910 total tax cost
• B)$94,350 total tax cost
• C)$99,772 total tax cost
• D)$0

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Definitions:

Gastrointestinal Endoscopes

Specialized tools used for visual examination of the gastrointestinal tract, including the esophagus, stomach, and intestines, to diagnose and sometimes treat conditions.

Health Care-Acquired

Infections or conditions that are contracted by a patient while receiving treatment or care in a healthcare facility.

Wound Infection

A complication in the healing process characterized by the invasion of the wound site by pathogenic microorganisms.

Vital Signs

Critical measurements of body function, including temperature, pulse, respiration, and blood pressure, that indicate the state of a patient's health.