How much cash would david keep after taxes

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Question - David would like to organize HOS (a business entity) as either an S corporation or as a C corporation generating a 12 percent annual before-tax return on a $300,000 investment. David's marginal income tax rate is 24 percent and the corporate tax rate is 21 percent. David's marginal tax rate on individual capital gains and dividends is 15 percent. HOS will pay out its after-tax earnings every year to its shareholders. If HOS is taxed as an S corporation, David's business income allocation would be subject to a 3.8 percent net investment income tax (he is a passive investor in the business.

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How much cash would David keep after taxes if HOS is organized as an S corporation?

How much cash would David keep after taxes if HOS is organized as an S corporation?

Reference no: EM132818182

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