Dave and his friend Stewart each owns 50 percent of KBS. During the year, Dave receives $75,000
compensation for services he performs for KBS during the year. He performed a significant amount of
work for the entity, and he was heavily involved in management decisions for the entity (he was not a
passive investor in KBS). After deducting Dave's compensation, KBS reports taxable income of
$30,000.
How much FICA and/or self-employment tax is Dave required to pay on his compensation and his
share of the KBS income if KBS is formed as a C corporation, an S corporation, or a limited liability
company (ignore the 0.9 percent additional Medicare tax)? (Do not round any percentage
calculations. Round other intermediate calculations and final answers to the nearest whole dollar
amount.)
C corporation
S corporation
Limited liability company