Paige Is Starting Paige's Poodle Parlor and Is Considering Alternative

question 42

Essay

Paige is starting Paige's Poodle Parlor and is considering alternative organizational forms.She anticipates the business will earn $100,000 from operating before compensating her for her services and before charitable contributions.Page,who is single,has $6,000 of income from other sources and other itemized deductions of $12,000.Her compensation for services will be $50,000.Charitable contributions to be made by the business are expected to be $5,000.Other distributions (dividends)to her from the business are expected to be $14,000.
Required: Compare her current income tax assuming she operates the business as a proprietorship,an S corporation,and a C corporation.Ignore payroll and other taxes.

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Definitions:

Managerial Roles

The specific categories of activities performed by managers, as identified by Henry Mintzberg, including interpersonal, informational, and decisional roles.

Behavioral Scientists

Researchers who study and analyze the actions and interactions of humans and animals.

Leadership

The act of guiding, directing, and influencing others towards achieving collective goals or visions.

Scientific Construct

A theoretical concept that is developed to explain patterns in observations and is utilized in the empirical testing of hypotheses.