Question: LL began a consulting business on 1/1/2016. Her bu…
LL began a consulting business on 1/1/2016. Her business is organized as a C (Regular Corporation) called L & L, Inc. Lucy owns 100% of the company’s stock.
L & L, Inc.
Income and expense information for 2016:
Revenues 1020000
Operating expenses 870000
Qualified dividend paid to Lucy during year 100000
Lucy did not receive any salary from the business. Lucy and Jason Lindsey (married, filing joint return; no children)
Other information for 2016:
Jason’s salary as a sales manager for a car dealership 142000
Total itemized deductions for couple 28000
A .What is the total tax liability for the corporation and the individuals?
B .Assume that Luc y’s business was organized as an LLC rather than as a C corporation. The revenue and expense information is the same as that above. Lucy received a distribution of100, 000 from the LLC. The couple’s other income and deductions are unchanged.
C What is the total tax liability for the LLC and the individuals?
- What would you recommend that Lucy do to improve the overall tax situation if she prefers to operate as a C crop?
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