Firm A expects to receive a $25,000 item of income in August and a second $25,000 item of income in December. The firm could delay the receipt of both items until January. As a result, it would defer the payment of tax on $50,000 income for one full year. Firm A decides to receive the August payment this year (and pay current tax on $25,000 income) but delay the receipt of the December payment. Can you offer an explanation for this decision?
Answer to relevant QuestionsTax planners often tell their clients that “a tax delayed is a tax not paid.” Can you pro-vide a more formal explanation of this bit of wisdom? Company EJ plans to build a new plant to manufacture bicycles. EJ sells its bicycles in the world market for $400 per bike. It could locate the plant in Province P, which levies a 20 percent tax on business income. On the ...Ms. JK recently made a gift to her 19-year-old daughter, Alison. Ms. JK’s marginal income tax rate is 39.6 percent, and Alison’s marginal income tax rate is 15 percent. In each of the following cases, compute the annual ...Identify the tax issue or issues suggested by the following situation, and state each issue in the form of a question. Company QP must decide whether to build a new manufacturing plant in Country B or Country C. Country B ...Why is tax research necessary? In other words, why is it not possible for experienced tax professionals to answer all tax questions without performing tax research?
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