The Capital-Idea Company is in its development stage and is deciding how to formally organize it business vnture. The founder, Rolf Lee is considering organizing as either a proprietor or a corporation. He expects revenues to be $2 million next year with total expenses amounting to $1.625 million, resulting in a taxable income of $375,000. Rolf is interested in estimating his federal income tax liability based on the schedules.
A. Calculate the amount of federal income tax Rolf would pay if Capital ideas is organized as a proprietorship. What would the marginal tax rate o the last dollar of taxable income and what would be the average tax rate?
B. Calculate the amount of federal income tax that the Capital Ideas company would have to pay if the venture is organized as a regularcorporation. What would be the marginal tax rate on the late dollar of taxable income and what would be the average tax rate?
C. If the Capital-Ideas Company is organized as a corporation and all after tax profets are paid out as dividends to Rolf Lee, what additional personal income taxes would be paid? What would be the marginal tax rate and average tax rate on this personal income recieved from the corporation?