Mackenzie is considering conducting her business, Mac561, as
either a single-member LLC or 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 Mackenzie and Mackenzie can claim the
qualified business income deduction on Mac561’s business income.
Determine Mackenzie’s after-tax cash flow from the entity’s
business income and any compensation she receives from the business
under the following assumptions: (Round intermediate
calculations and your final answers to the nearest whole
dollar.)
Mackenzie conducted Mac561 as a single-member LLC.
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Mackenzie is considering conducting her business, Mac561, as either a single-member LLC or an S corporation. Assume her
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Mackenzie is considering conducting her business, Mac561, as either a single-member LLC or an S corporation. Assume her
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