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 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 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 C corporation?

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Definitions:

Information Sharing

The exchange of data, knowledge, or information between individuals, organizations, or systems, facilitating communication and decision-making.

Nonjudgmental

An attitude or approach that does not express criticism or evaluation of others.

Manipulating

The act of controlling or influencing a person or situation cunningly or unfairly.

Orientation Stage

The initial phase in a therapeutic relationship where goals and procedures are established.