Assume That Pre-Tax Profit of $50,000 Has Been Earned by a Business

Multiple Choice

Assume that pre-tax profit of $50,000 has been earned by a business, and the owner/proprietor wants to withdraw all of the after-tax profit for personal use. Assume the tax rate for a C corporation is 34%, while the rate for a person is 27%. The after-tax earnings available under the corporate and proprietorship forms are:

A) for a corporation, $33,000; for a proprietorship, $36,500.
B) for a corporation, $23,760; for a proprietorship, $36,500.
C) for either a corporation or a proprietorship, $36,500.
D) for either a corporation or a proprietorship, $23,760.