Pear, an individual, plans to start a small business, which will operate as a corporation....
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Accounting
Pear, an individual, plans to start a small business, which will operate as a corporation. In year 0 , she expects the corporation to generate an ordinary loss of $1,400,000. Subsequently, she expects the corporation to be profitable, and projects ordinary profit of $2,100,000 in year 1 , and $3,500,000 in year 2 . Pear's personal marginal tax rate on ordinary income is 37%. Assuming a corporate tax rate of 21% and a 10% discount rate, calculate the present value of expected tax costs on the business earnings for the first 3 years of operations if the business does not make an S corporation election. Assume the excess business loss limitation does not apply. Round your discount rate calculations to three decimal places. $740,733$1,663,200$1,320,900$1,257,970
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