Becca Would Like to Organize BMI as Either an LLC

question 35

Essay

Becca would like to organize BMI as either an LLC or as a corporation (taxed as a C corporation)generating a 4 percent annual before-tax rate of return on a $450,000 investment.Individual ordinary rates are 28 percent,corporate rates are 15 percent,and individual capital gains and dividends tax rates are 15 percent.BMI will distribute its earnings annually to either its members or shareholders.
a.Ignoring self-employment taxes,how much would Becca keep after taxes if BMI is organized as either a 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 BMI is organized as either an LLC or as a corporation (taxed as a C corporation)?

---

Definitions:

Objective Measures

Quantifiable data used to evaluate conditions or performance, free from personal subjective judgments.

Placebo Responses

Beneficial effects experienced after the administration of a treatment that has no therapeutic value, attributed to the patient's belief in the treatment.

Faith Healing

The practice of prayer and gestures that are believed by some to elicit divine intervention in physical healing.

Medical Treatments

Procedures or applications of remedies to address or cure illnesses, injuries, or disease conditions in patients.