Question

Jacob is a member of WCC (an LLC taxed as a partnership). Jacob
was allocated $150,000 of business income from WCC for the year.
Jacob’s marginal income tax rate is 37 percent. The business
allocation is subject to 2.9 percent of self-employment tax and 0.9
percent additional Medicare tax. **(Round your intermediate
calculations to the nearest whole dollar amount.)**

**a.** What is the amount of tax Jacob will owe on
the income allocation if the income is not qualified business
income?

Answer #1

**Solution:**

Particulars |
Amount($) |

1. Business income allocation | $150,000 |

2. QBI deductions | $0 |

3. Deduction for 50% of SE tax(150,000*0.9235*0.029*0.5) | $2,009 |

4. Net income taxable business income (150,000 - 0 - 2,009) | $147,991 |

5. Income tax paid by the owner (147,991 * 0.37) | $54,757 |

6. Self employment tax (150,000*0.9235*0.029) | $4,017 |

7. Additional medicare tax (150,000 * 0.9235 * 0.009) | $1,247 |

8. Owner level tax. (54,757 + 4,017 + 1,247) | $60,021 |

Jacob is a member of WCC (an LLC taxed as a partnership). Jacob
was allocated $150,000 of business income from WCC for the year.
Jacob’s marginal income tax rate is 37 percent. The business
allocation is subject to 2.9 percent of self-employment tax and 0.9
percent additional Medicare tax. (Round your intermediate
calculations to the nearest whole dollar amount.)
b. What is the amount of tax Jacob will owe on
the income allocation if the income is qualified business income...

MacKenzie is considering conducting her business, Mac561, as
either a single-member LLC or as an S corporation. Assume her
marginal ordinary income tax rate is 37 percent, her marginal FICA
rate on employee compensation is 1.45 percent, her marginal
self-employment tax rate is 2.9 percent, and any employee
compensation or self-employment income she receives is subject to
the 0.9 percent additional Medicare tax. Also, assume Mac561
generated $200,000 of business income before considering the
deduction for compensation Mac561 pays to...

10. Mackenzie is considering conducting her business, Mac561, as
either a single member LLC or as an S corporation. Determine
Mackenzie’s after-tax cash flow from the entity’s business income
and any compensation she receives from the business assuming her
marginal ordinary income tax rate is 37 percent, her marginal FICA
rate on employee compensation is 1.45 percent, her marginal
self-employment tax rate is 2.9 percent, and any employee
compensation or self-employment income she receives is subject to
the .9 percent...

Mackenzie is considering conducting her business, Mac561, as
either a single member LLC or as an S corporation. Determine
Mackenzie’s after-tax cash flow from the entity’s business income
and any compensation she receives from the business assuming her
marginal ordinary income tax rate is 37 percent, her marginal FICA
rate on employee compensation is 1.45 percent, her marginal
self-employment tax rate is 2.9 percent, and any employee
compensation or self-employment income she receives is subject to
the .9 percent additional...

Andrea would like to organize SHO as either an LLC (taxed as a
sole proprietorship) or a C corporation. In either form, the entity
is expected to generate an 11 percent annual before-tax return on a
$200,000 investment. Andrea’s marginal income tax rate is 35
percent and her tax rate on dividends and capital gains is 15
percent. Andrea will also pay a 3.8 percent net investment income
tax on dividends and capital gains she recognizes. If Andrea
organizes SHO...

Andrea would like to organize SHO as either an LLC (taxed as a
sole proprietorship) or a C corporation. In either form, the entity
is expected to generate an 11 percent annual before-tax return on a
$200,000 investment. Andrea’s marginal income tax rate is 35
percent and her tax rate on dividends and capital gains is 15
percent. Andrea will also pay a 3.8 percent net investment income
tax on dividends and capital gains she recognizes. If Andrea
organizes SHO...

Derek would like to organize LFTS as either an LLC or as a
corporation (taxed as a C corporation) generating a 12 percent
annual before-tax return on a $300,000 investment. Assume the
relevant (marginal) individual tax rate is 37% and corporate tax
rate is 21%. Derek’s capital gain and dividends tax rate is 20%
(ignore the net investment income surtax of 3.8% and the additional
Medicare tax of 0.9%. LFTS will pay out its after-tax earnings
every year to either...

Andrea would like to organize SHO as either an LLC (taxed as a
sole proprietorship) or a C corporation. In either form, the entity
is expected to generate an 10 percent annual before-tax return on a
$320,000 investment. Andrea’s marginal income tax rate is 35
percent and her tax rate on dividends and capital gains is 15
percent. Andrea will also pay a 3.8 percent net investment income
tax on dividends and capital gains she recognizes. If Andrea
organizes SHO...

Andrea would like to organize SHO as either an LLC (taxed as a
sole proprietorship) or a C corporation. In either form, the entity
is expected to generate an 11 percent annual before-tax return on a
$200,000 investment. Andrea’s marginal income tax rate is 35
percent and her tax rate on dividends and capital gains is 15
percent. Andrea will also pay a 3.8 percent net investment income
tax on dividends and capital gains she recognizes. If Andrea
organizes SHO...

Meredith is a passive 30% member of the MNO LLC. She is not a
managing member and she does not participate in any activities of
the LLC. Her interest is more in the nature of an investment. In
the current year, Meredith's distributive share of income from the
LLC was $50,000. In addition, she received a guaranteed payment of
$40,000 for the use of her capital. Assume that her income from
other sources exceeds $500,000. How much of Meredith's LLC...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 14 minutes ago

asked 15 minutes ago

asked 18 minutes ago

asked 18 minutes ago

asked 20 minutes ago

asked 39 minutes ago

asked 45 minutes ago

asked 55 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago