Question

Homework: Homework Chapter 02 Save 1 of 6 (1 complete) HW Score: 1.92%, 0.48 of 25 pts Score: 0 of 5 pts PC:2-28 (similar to) Question Help Lianna, a single taxpayer, operates a coffee shop. She is considering either continuing the business as a sole proprietorship or reorganizing it as either a C corporation or an Scorporation Her goal is to withdraw $25,000 of profits from the business annually while minimizing her total tax liability She expects the business to generale annually $46,000 of taxable income, all of which qualities as pass-through income before considering a deductible salary expense (Click the icon to view more information) Requirement Which business form(s) can best achieve Lilianna's goals? Complete the table to determine the amount of total tax for each business form Start with the entity level, then determine Linna's tax and finally the total tax (Use parentheses or a minus sign for numbers to be subtracted Complete all input fields. For entries with a $0 balance, make sure to enter "O" in the appropriate column For simplification purposes, please use a 22% tax rate to calculate the tax on Lihanna's ordinary income, do not use the tax rate schedules) Sole Proprietorship C Corporation C Corporation with Salary with Dividend Corporation with Salary Corporation with Distribution Entity Level: Income before salary Salary deduction Taxable income Entity level tax Enter any number in the edit fields and then click Check Answer 3 parts 5 remaining Clear All Check Answer

Answer 1

Ans.

Analysis of Tax Consequences

	Sole Prop	C Corp w Salary	C Corp w Dividend	S Corp w Salary	S Corp w Distribution
Entity Level
Income before Salary	46,000	46,000	46,000	46,000	46,000
Salary Deduction	-	25,000	-	25,000	-
Taxable Income	46,000	21,000	46,000	21,000	46,000
Entity Level Tax	10,120	4,620	10,120	4,620	10,120