Megan operates a housecleaning business as a sole proprietorship. She oversees a team of cleaning
personnel, markets the business, and provides supplies and equipment. The business has been
generating net taxable profits of $ per year, before considering the QBI deduction. As a sole
proprietor, Megan qualifies for the percent deduction, reducing taxable income from the business to
$
Required:
a Assume that Megan's marginal tax rate on ordinary income is percent and that she has no
pressing need for cash flow from this business. Should Megan consider incorporating and operating
the business through a C corporation? Fill the below table to justify your answers. Ignore any payroll
or selfemployment tax considerations.
b How would your conclusion in part a change if Megan's marginal tax rate were only percent?
Complete this question by entering your answers in the tabs below.
Assume that Megan's marginal tax rate on ordinary income is percent and that she has no pressing need
business. Should Megan consider incorporating and operating the business through a C corporation? Fill the
your answers. Ignore any payroll or selfemployment tax considerations.
