Problem:
The ABC Company was incorporated (as an LLC) two years ago. The success of the company is exceeding the owners' expectations. The land owned by the company is used as a site for special events and parties. The rental income from the events and fees for services rendered at these events are substantial for a new business.
The ABC Company has budgeted a profit of $300,000 for the third year of business operations. To date Don and Jane have not been compensated or withdrawn any funds from the company, but feel that the time has come for them to be rewarded.
Don and Jane turn to you, their tax advisor for assistance in determining how to reward themselves financially from their successful business.
What are the tax issues facing Don and Jane in connection with withdrawing money from the (LLC) corporation? Discuss different options and provide support with computations showing the tax consequences of the various choices.
Should be on MS Word document with citations and APA style.