Jerry Would Like to Organize FBC as Either an LLC

question 16

Essay

Jerry would like to organize FBC as either an LLC or as a corporation (taxed as a C corporation)generating an 8 percent annual before-tax rate of return on a $400,000 investment.Individual and corporate tax rates are both 35 percent and individual capital gains and dividends tax rates are 15 percent.FBC will pay out its after-tax earnings every year to either its members or its shareholders.
a.Ignoring self-employment taxes,how much would Jerry keep after taxes if FBC is organized as either an LLC or as a corporation (taxed as a C corporation)?
b.Ignoring self-employment taxes,what are the overall tax rates (combined owner and entity level)tax rates if FBC is organized as either an LLC or as a corporation (taxed as a C corporation)?

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Definitions:

Generations

Generations are groups of people born and living around the same time, known for having shared experiences that shape their worldview.

Authoritative

Characterized by or showing a commanding, self-confident force or an ability to give instructions or directions.

Firm Controls

Strict rules or guidelines implemented to regulate behavior or operations within an organization or system.

Responsive

Being quick to react or respond appropriately to changes or stimuli.