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PLEASE CITE UTKE AND MASON (2025) WHEN USING THIS TEMPLATE
Given0 <= e <= 1
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Corp Tax Rate
Personal Tax Rate
Cap. Gains Rate
Givenb >= 1OK
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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%GivenG > 0OK
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Check:If Y > 0, d = 1OK
NOTE: The Full Equation (Eqn. X) below will work even if these assumptions do not hold. The rearranged and modeled relations may not.
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Variables ($ in millions):
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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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LLC gain (G) relative to C-corp gain (accounts for premium paid to LLC for Basis Step-up)b=100.00%
(must be at least 100%)
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Percent of Capital Gains rate applicable to C-Corp (accounts for Small. Bus. Stock Exclusion)e=100.00%
(must fall between 0 and 100%, inclusive; at 100%, there is no exclusion; i.e., this is 1 - the exclusion percentage)
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Grouped and Rearranged Equation (Eqn. Y)
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Left-Hand Side (LHS)Right-Hand Side (RHS)
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b * G - G +(1-W)*[G * ( e * tg -b * tg) +Y * e * tg -Y * tp +Y * d * ty *(1 - e * tg)]W * [ ty *(b * tg +Y +Y * D)]
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LHS Value (higher reflects LLC preference)
 23,914.02 RHS Value 91,802.36
(note: these are not total values, but the values relevant for comparison, see below for totals)
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 67,888.34 Positive if C-Corp Preferred
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Preference:C-Corp
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As a % of Equity7.6%
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Full Equation (Eqn. X)
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LLCC Corp
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(1-W)*[b*G -b*G*tg + Y *(1-tp)]+ W*[b*G*(1-ty) + Y*(1-ty)](1-W)*[G*(1-e*tg) + Y*(1-d*ty)*(1-e*tg)] +W*[G + Y*(1-d*ty)]
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LLC Value
 476,499.20 C-Corp Value 544,387.55
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Diff 67,888.34 Positive if C-Corp Preferred
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Diff vs above?
No - It's Correct
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