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Required information Andrea would like to organize SHO as either an LLC or as a C...

Required information

Andrea would like to organize SHO as either an LLC or as a C corporation generating an 18 percent annual before-tax return on a $300,000 investment. Assume individual and corporate tax rates are both 35 percent and individual capital gains and dividend tax rates are 15 percent. SHO will pay out its after-tax earnings every year as a dividend if it is formed as a C corporation. Assume Andrea is the sole owner of the entity. Ignore self-employment taxes, the additional Medicare tax, and the net investment income tax.

a. How much would Andrea keep after taxes if SHO is organized as either an LLC or as a C corporation?

LLC:

C Corporation:

b. What are the overall tax rates if SHO is organized as either an LLC or as a C corporation?

LLC: ____%

C Corporation: _____%

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