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

Comprehend payroll accounting including recording salaries, withholdings, and employer payroll taxes.

Analyze warranty expenses and liabilities using different accounting methods.

Calculate bonuses based on income after bonus and tax.

Categorize current liabilities into appropriate groups and understand their nature.

---

Definitions:

Depression

A mental health disorder characterized by persistent sadness, lack of interest or pleasure in activities, and can significantly impair daily functioning.

Benzodiazepines

A class of psychoactive drugs used primarily for treating anxiety, insomnia, and several other conditions, known for their sedative effects.

Antidepressant Drug

A type of medication designed to alleviate symptoms of depression by adjusting the chemical balances in the brain.

Bipolar Disorder

A disorder associated with episodes of mood swings ranging from depressive lows to manic highs.