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This posting addresses tax differences in different entities

Oprah is starting Oprah's Poodle Parlor and is considering alternative organizational forms. She anticipates the business will earn $100,000 from operating before compensating her for her services and before charitable contributions. Oprah, who is single, has $3,000 of income from other sources and other itemized deductions of $12,000. Her compensation for services will be $50,000. Charitable contributions to be made by the business are expected to be $5,000. Other distributions (dividends) to her from the business are expected to be $14,000.

Required: Compare her current income tax assuming she operates the business as a proprietorship, an S corporation, and a C corporation. Ignore payroll and other taxes

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SP S CORP C CORP
Business Income
Operating ...

Solution Summary

The solution provides a breakdown of the difference in current income taxes for Oprah, owner of Poodle Parlor as a proprietorship, an S corporation, and a C corporation. Exact breakdowns are given.

$2.19