David Would Like to Organize HOS as Either an LLC

question 55

Essay

David would like to organize HOS as either an LLC or as a corporation (taxed as a C corporation)generating a 12 percent annual before-tax return on a $300,000 investment.Individual and corporate tax rates are both 30 percent and individual capital gains and dividend tax rates are 15 percent.HOS will pay out its after-tax earnings every year to either its members or its shareholders.
a.Ignoring self-employment taxes,how much would David keep after taxes if HOS is organized as either an LLC or a corporation (taxed as a C corporation)?
b.Ignoring self-employment taxes,what are the overall tax rates (combined owner and entity level)if HOS is organized as either an LLC or a corporation (taxed as a C corporation)?

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Definitions:

Evolutionary Principles

Core concepts derived from evolutionary biology that explain how species evolve over time through mechanisms like natural selection and genetic variation.

Reproductive Fitness

The genetic contribution an individual makes to the next generation's gene pool, often measured by the number of offspring that survive to reproductive age.

Prospective Mate

An individual considered by another as a potential partner in a romantic relationship, assessing compatibility for a possible future together.

Good Genes

A hypothesis suggesting that certain traits, which are perceived as attractive, are signals of good health and genetic fitness.