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:

Temperate Deciduous Forests

Biomes characterized by four seasons, including a distinct winter, and dominated by trees that lose their leaves annually.

Tropical Rain Forests

Biomes located around the Earth’s equator, characterized by high rainfall, diverse species of flora and fauna, and a constant warm temperature throughout the year.

Sunlight Penetrating

The process by which sunlight makes its way through the Earth's atmosphere to reach the surface, providing light and warmth essential for life.

Ground Level

The specific area or surface upon which activities, operations, or structures are situated and take place.