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PLEASE CITE UTKE AND MASON (2025) WHEN USING THIS TEMPLATE
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Corp Tax Rate
Personal Tax Rate
Cap. Gains Rate
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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. 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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Grouped and Rearranged Equation (Eqn. 11)
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LLCC Corp
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(1-W)*[Y*(1-tp)]+ W*[G*(1-ty) + Y*(1-ty)](1-W)* [ Y*(1-d*ty)*(1-tg)] +W*[G + Y*(1-d*ty)]
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LLC Value
 9,256.04 C-Corp Value 77,144.39
(note: these are not total values, but the values relevant for comparison, see below for totals)
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Total 67,888.34 Positive if C-Corp PreferredProblem?
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N1=[Y*(tg - tp+d*ty*(1-tg)) 38,571.00 Preference:C-Corp
Check vs. Propositions:
C-Corp
No - It's Correct
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N2=[ty*[(1-d)* Y + G]] 241,585.17
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As a % of Equity7.6%
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N1 = W HAT 38,571.00 13.77%
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N1 + N2 280,156.16 Proposition 1:
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1.1Y > 0G ≥ G BARtp ≥ tp HATPref.
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H1=(tg - tp) /ty-tg + 131.057%NoYESYESLLC-PT
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H2=G / Y (2.62)1.2Y > 0G ≥ G BARtp < tp HATG > 0W > W BAR
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NoYESNoYESYESLLC-PT
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H1 = W BAR 0.31 -13.48%1.3Y > 0G < G BARtp ≥ tp HATG > 0
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H1 + H2 (2.30)NoNoYESYESLLC-PT
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1.4 (N/A)Y > 0G < G BARtp ≥ tp HATG < 00 < W ≤ W BAR
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tp HATd * (1- tg) * ty + tg29.40%NoNoYESNoNoLLC-PT
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Proposition 2:
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2.1Y < 0G ≥ G BARtp ≤ tp HAT
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YESYESNoLLC-PT
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G Hat - G (1,251,898.73)2.2Y < 0G ≥ G BARtp > tp HATG Hat ≤ YW > W HAT
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(1 - d)YESYESYESYESYESC-Corp
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2.3Y < 0G < G BARtp ≤ tp HATG Hat ≤ Y
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G BAR-Y *(tg -tp - d*ty * tg + ty) 65,993.84 188,553.82 YESNoNoYESLLC-PT
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ty 0.350 2.4Y < 0G < G BARtp ≤ tp HATY < G Hat0 < W ≤ W HAT
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YESNoNoNoNoLLC-PT
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Full Equation (Eqn. 10)
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LLCC Corp
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(1-W)*[G -G*tg + Y *(1-tp)]+ W*[G*(1-ty) + Y*(1-ty)](1-W)*[G*(1-tg) + Y*(1-d*ty)*(1-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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