Loretta Plans to Start a Small Business, Operated Through a Corporation

question 62

Multiple Choice

Loretta plans to start a small business, operated through a corporation. In year 0, she expects the corporation to generate a loss of $100,000. Subsequently, she expects the corporation to be profitable, and projects profit of $150,000 in year 1, and $250,000 in year 2. Loretta's personal marginal tax rate on ordinary income is 39.6%. Using a 10% discount rate, calculate the present value of expected tax savings and costs on the business earnings for the first 3 years of operations if the business makes an S corporation election.

• A) $118,800 total tax cost
• B) $99,169 total tax cost
• C) $99,772
• D) $0

Understand the role of technology in facilitating or hindering effective communication within an organization.

Identify the specific characteristics and names of different types of rocks.

Interpret the movements and type of faults using rock formations and features.

Understand the relationship between foliation and rock type.

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Definitions:

Machine-Hours

An indicator reflecting the duration of machinery utilization during the manufacturing process, commonly employed in the distribution of manufacturing overhead expenses.

Manufacturing Overhead

Represents indirect costs involved in producing goods, including maintenance expenses, quality control, and equipment depreciation.

Variable Manufacturing Overhead

The portion of manufacturing overhead costs that vary directly with production volume, such as supplies and indirect labor.

Fixed Manufacturing Overhead

Costs that do not vary with the level of production or sales, such as rent, property taxes, and salaries of permanent employees.