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PLEASE CITE UTKE AND MASON (2025) WHEN USING THIS TEMPLATE
GivenC > 0OK
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Corp Tax Rate
Personal Tax Rate
Cap. Gains Rate
GivenG > COK
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Parameters:tytptgGiventp > tgOK
Light Blue indicates cells that can be edited to evaluate different scenarios
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35.0%39.6%23.8%
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Check:If Y > 0, d = 1OK
NOTE: The Full Equation (Eqn. 10) below will work even if these assumptions do not hold. The and modeled relations may not.
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Variables:
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Cumulative Operating Inc/(Loss)
Y= (378,173.00) (378,173)
(Allen et al. 2022, Table 2+3, net)
Total Equity 898,591.00 (Allen et al. 2022, Table 2+3)
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Realized G/(L) on Sale of CoG= 989,000.00 989,000
(Allen et al. 2022, p X, 1,509 minus 898) + -Y (because in our model, price paid is reduced by Y)
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% of Tax-Exempt LPsW=38.00%38.00%
(Allen et al. 2022, p X)
Base case falls into: Proposition 2, case 2
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% of Op. Losses Used to Offset Inc.
d=21.00%21.00%
(Allen et al. 2022, Table 2)
d to use =21.00%
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C = 107,788 Pref. Ret8.00%
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Pref. ret in $ = 71,887
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Grouped and Rearranged Equation (Eqn. 11)
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LLCC Corp
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(1-W)*[Y*(1-tp)]+ W*[G Tilde*(1-ty) + Y*(1-ty)](1-W)* [ Y*(1-d*ty)*(1-tg)] +W*[G Tilde + Y*(1-d*ty)]
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LLC Value
 (17,367.59)C-Corp Value 36,184.95
(note: these are not total values, but the values relevant for comparison, see below for totals)
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Total
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 53,552.54 Positive if C-Corp PreferredProblem?
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G DOT[G +C] 1,096,788 Preference:C-Corp
Check vs. Propositions:
C-Corp
No - It's Correct
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G TILDE[G -C] 881,212
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As a % of Equity6.0%
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N1=[Y*(tg - tp+d*ty*(1-tg)) 38,571.00
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N2 Tilde=[ty*[(1-d)* Y + G Tilde]] 203,859.37 Proposition 1:
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1.1Y > 0G TILDE ≥ G BARtp ≥ tp HATPref.
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N1 = W HAT 38,571.00 15.91%NoYESYESLLC-PT
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N1 + N2 242,430.36 1.2Y > 0G Tilde ≥ G BARtp < tp HATG Tilde > 0W > W BAR
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NoYESNoYESYESLLC-PT
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H1=(tg - tp) /ty-tg + 131.057%1.3Y > 0G Tilde < G BARtp ≥ tp HATG Tilde > 0
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H2 Tilde=G Tilde / Y (2.33)NoNoYESYESLLC-PT
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1.4 (N/A)Y > 0G Tilde < G BARtp ≥ tp HATG Tilde < 00 < W ≤ W BAR
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H1 = W BAR 0.31 -15.38%NoNoYESNoNoLLC-PT
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H1 + H2 (2.02)
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Proposition 2:
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tp HATd * (1- tg) * ty + tg29.40%2.1Y < 0G Tilde ≥ G BARtp ≤ tp HAT
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YESYESNoLLC-PT
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2.2Y < 0G Tilde ≥ G BARtp > tp HATG Tilde Hat ≤ YW > W HAT
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YESYESYESYESYESC-Corp
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G Tilde Hat - G Tilde (1,115,458.23)2.3Y < 0G Tilde < G BARtp ≤ tp HATG Tilde Hat ≤ Y
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(1 - d)YESNoNoYESLLC-PT
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2.4Y < 0G TIlde < G BARtp ≤ tp HATY < G Tilde Hat0 < W ≤ W HAT
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G BAR-Y *(tg -tp - d*ty * tg + ty) 65,993.84 188,553.82 YESNoNoNoNoLLC-PT
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ty 0.350
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Full Equation (Eqn. 10)
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LLCC Corp
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(1-W)*[G DOT -G DOT*tg + Y *(1-tp)]+ W*[G Tilde*(1-ty) + Y*(1-ty)](1-W)*[G Dot*(1-tg) + Y*(1-d*ty)*(1-tg)] +W*[G Tilde + Y*(1-d*ty)]
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LLC Value
 500,798.93 C-Corp Value 554,351.47
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Diff 53,552.54 Positive if C-Corp Preferred
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Diff vs above?
No - It's Correct
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