| Artemis Natural Homes | |||||||||
| Taxes | |||||||||
| Years 1 to 5 | |||||||||
| ($) | |||||||||
| Industry | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||||
| Net Revenues | 102,000 | 357,000 | 595,000 | 952,000 | 1,088,000 | ||||
| Income Tax (Rate Federal & State) | 0.00 | 0.48 | 0.39 | 0.44 | 0.44 | ||||
| ( and Self Employment) | |||||||||
| Net Earnings Before Taxes | (15,614) | 16,657 | 31,729 | 81,743 | 71,657 | ||||
| Cumulative | (15,614) | 1,043 | 32,771 | 114,514 | 186,171 | ||||
| Taxes | 0 | -504 | -12,342 | -35,885 | -31,457 | ||||
| Percent of Revenues | -1.3% | 0.0% | -0.1% | -2.1% | -3.8% | -2.9% | |||
| Limited Liability Company | |||||||||
| income is treated as personal income | |||||||||
| CEO salary | 15,000 | 51,000 | 76,000 | 84,000 | 88,000 | ||||
| Total taxable to select marginal tax rate | 0 | 52,043 | 107,729 | 165,743 | 159,657 | ||||
| Federal marginal tax rate | 0% | 28% | 31% | 36% | 36% | ||||
| (from 1998 1040 instructions) | |||||||||
| State marginal tax rate (assumed fixed) | 0% | 5% | 5% | 5% | 5% | ||||
| Federal self employment tax | |||||||||
| social security taxable | 0 | 1,043 | 0 | 0 | 0 | ||||
| (company's portion) | |||||||||
| social security tax @ 12.4% | 0.00 | 129.30 | 0.00 | 0.00 | 0.00 | ||||
| medicare tax @ 2.9% | 0.00 | 30.24 | 920.13 | 2,370.54 | 2,078.06 | ||||
| total self employment tax | 0.00 | 159.53 | 920.13 | 2,370.54 | 2,078.06 | ||||
| convert to percentage of EBT | 0.00% | 15.30% | 2.90% | 2.90% | 2.90% | ||||
| Assumptions | |||||||||
| CEO pays social security on her income first, out of personal funds, satisfying the social security tax requirement. (Taxable cutoff is $68,400.) | |||||||||
| CEO calculates her federal income tax rate, to be paid with her personal funds, on her salary only. Therefore, company contribution | |||||||||
| to federal income tax bill is calculated at the MARGINAL tax rate, which may be higher than the CEO's net personal tax rate. | |||||||||
| 1998 Federal tax rates | Income >= | Marginal rate | |||||||
| -1,000,000,000.00 | 0 | ||||||||
| 0.01 | 15.0% | ||||||||
| 25,350.01 | 28.0% | ||||||||
| 61,400.01 | 31.0% | ||||||||
| 128,100.01 | 36.0% | ||||||||
| 278,450.01 | 39.6% | ||||||||