Discuss s corporation or as a c corporation

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Evon would like to organize SHO as either an S corporation or as a C corporation, generating annual before-tax earnings of $350,000. His individual ordinary tax rate is 33% and his corporate tax rate is 34%; his individual capital gains and dividend tax rates are 15%. SHO will pay out its after-tax earnings every year as a dividend if it is formed as a C corporation. Assume Evon 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 Evon keep after taxes if SHO is organized as either an S corporation or as a C corporation?

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

Reference no: EM131750070

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