Ziggy continues to earn only about $30,000 a year in royalties, etc. from licensing his father's image, music, etc. He asks you for tax advice regarding incorporating or not for the annual receipt of the $30,000.
| a. |
You recommend an LLC because they’re the hot ticket. He can enjoy limited liability and tax rates at the individual rate. Employment taxes and a possible passive tax are no problem. |
|
| b. |
You recommend a C corporation in order to lock up income in the corporation at lower tax brackets. Double tax is no problem. |
|
| c. |
You recommend that he just continue receiving royalties and report them on Form 1040. He may purchase insurance if he is worried about lawsuits. |
|
| d. |
None of these is good advice. |
Solution:In the given problem Ziggy earn $30,000 from royalities from licensing his father's image ,music etc.
a.) In This Option if Ziggy form LLC then -
b.) In this option if Ziggy opt C-Corporation-
Therefore in my opinion Ziggy must opt for option C, As it is most beneficial option which provides saving in higher tax rates applicable in above option a & b.
Ziggy continues to earn only about $30,000 a year in royalties, etc. from licensing his father's...
Please read the article and answer about questions. You and the Law Business and law are inseparable. For B-Money, the two predictably merged when he was negotiat- ing a deal for his tracks. At other times, the merger is unpredictable, like when your business faces an unexpected auto accident, product recall, or government regulation change. In either type of situation, when business owners know the law, they can better protect themselves and sometimes even avoid the problems completely. This chapter...