Taylor Would Like to Organize DRK as Either an LLC

question 59

Essay

Taylor would like to organize DRK as either an LLC or as a corporation (taxed as a C corporation)generating a 13 percent annual before-tax rate of return on a $250,000 investment.Individual and corporate tax rates are both 30 percent and individual capital gains and dividends tax rates are 5 percent.DRK will distribute its earnings annually to either its members or shareholders.
a.Ignoring self-employment taxes,how much would Taylor keep after taxes if DRK is organized as either an LLC or as a corporation (taxed as a C corporation)?
b.Ignoring self-employment taxes,what are the overall (combined owner and entity level)tax rates if DRK is organized as either an LLC or as a corporation (taxed as a C corporation)?

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Definitions:

Ducklings

Ducklings are the young of ducks; in psychology, they are often used in imprinting studies, which show how they can form attachments during a critical period early in life.

Blisspoint

The free operant level of two responses.

Set Point

A set point in physiological and psychological contexts refers to a theoretical value that the body or mind aims to maintain through various regulatory mechanisms, such as body temperature or weight.

Operant Level

The baseline rate of a behavior before conditioning or reinforcement is applied.