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Business, 21.02.2020 16:43 thompsonjeremiah837

Andrea would like to organize SHO as either an S corporation or as a C corporation generating a 11 percent annual before-tax return on a $200,000 investment. Assume individual tax rate is both 35 percent and individual capital gains and dividend tax rates are 18.8 percent (i. e., 15% discounted rate on capital gains and dividends 3.8% net investment income tax). Andrea is eligible to claim the full deduction for qualified business income. SHO will pay out its after-tax 2 earnings every year as a dividend if it is formed as a C corporation. Assume Andrea is the sole owner of the entity and she materially participates in the business.

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