Since the Tax Relief Act of 2003,if a corporation or partnership has pre-tax earnings of $110,000 while the corporation is subject to a 35% income tax rate and an investor is subject to a 35% personal tax rate and a 15% capital gains tax rate,then what is the advantage to being a partnership (compared to a corporation)if all of the proceeds are paid out to investors in either legal form?

Question

Quizplus · Accepted Answer

Partnership: $110,000 * .65 = $71,500
Corporation: $110,000 * .65 * .85 = $60,775
Partnership - Corporation = $71,500 - $60,775 = $10,725

Since the Tax Relief Act of 2003,if a Corporation or Partnership