Logan, a 50-percent shareholder in Military Gear Incorporated (MG), is comparing the tax consequences of losses from C corporations with losses from S corporations. Assume MG has a $103,000 tax loss for the year, Logan's tax basis in his MG stock was $151,500 at the beginning of the year, and he received $76,500 ordinary income from other sources during the year. Assuming Logan's marginal tax rate is 24 percent, how much more tax will Logan pay currently if MG is a C corporation compared to the tax he would pay if it were an S corporation?

Question

Quizplus · Accepted Answer

The Answer of Logan, a 50-percent shareholder in Military Gear Incorporated (MG), is comparing the tax consequences of losses from C corporations with losses from S corporations. Assume MG has a $103,000 tax loss for the year, Logan's tax basis in his MG stock was $151,500 at the beginning of the year, and he received $76,500 ordinary income from other sources during the year. Assuming Logan's marginal tax rate is 24 percent, how much more tax will Logan pay currently if MG is a C corporation compared to the tax he would pay if it were an S corporation?

Logan, a 50-Percent Shareholder in Military Gear Incorporated (MG), Is