Mrs. Z, a resident of Virginia, paid $50,000 for a bond issued by Pennsylvania that paid $3,400 interest this year. Her marginal state income tax rate is 6 percent. Under Virginia law, interest on debt obligations issued by another state is taxable. Mrs. Z can deduct state income tax on her Form 1040, and her marginal federal income tax rate is 25 percent. Compute her after-tax rate of return on the bond.
Answer to relevant QuestionsMs. Pay, who has a 43.4 percent marginal tax rate on interest income (39.6 percent income tax 13.8 percent Medicare contribution tax), owns HHL Inc. corporate bonds in her investment portfolio. She earned $74,800 interest ...Identify the tax issue or issues suggested by the following situations and state each issue in the form of a question. At the beginning of the year, Ms. A owned 2,900 shares of SBS stock with a basis of $32 per share. SBS ...Todd Zimler, who files a joint income tax return with his wife, Stella, owns 85 per-cent of the outstanding stock of Zimler Manufacturing. In January of last year, Todd transferred a tract of investment land to the ...Last year, both the Burton family and the Awad family incurred $8,000 unreimbursed medical expenses. Mr. and Mrs. Burton deducted $6,000 of their expenses, while Mr. and Mrs. Awad were unable to deduct any of their expenses. ...Assume that Congress amended the tax law to limit the itemized deduction for charitable contributions to 5 percent (rather than 50 percent) of AGI. Discuss the incidence of the tax increase represented by this expansion of ...
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