Emmy Would Like to Organize PRK as Either an LLC

question 65

Essay

Emmy would like to organize PRK as either an LLC or as a C corporation generating a 15 percent annual before-tax rate of return on a $100,000 investment. Individual ordinary rates are 25 percent, corporate rates are 15 percent, and individual capital gains and dividends tax rates are 5 percent. PRK will distribute its earnings annually to either its members or shareholders.
a. Ignoring self-employment taxes, how much would Emmy keep after taxes if PRK is organized as either an LLC or as a C corporation?
b. Ignoring self-employment taxes, what are the overall tax rates (combined entity and owner level) if PRK is organized as either an LLC or a corporation?

---

Definitions:

Planning Stage

The phase in project management or intervention development where goals are set, strategies are outlined, and resources are identified and allocated for implementation.

Specify Action Steps

The process of clearly defining the specific actions or tasks required to achieve a goal or complete a project.

Culturally Competent Practice

Professional approaches that respect and effectively address the beliefs, behaviors, and needs of individuals from diverse cultural backgrounds.