Rodney, a cash-basis taxpayer, owes $40,000 in tax-deductible consulting fees for his business. Assume that it is December 28th and that Rodney can avoid any finance charges if he pays the accounting fees by January 10th. Rodney's tax rate this year is 32 percent and his after-tax rate of return is 10 percent. What tax rate next year will make Rodney indifferent between paying the $40,000 this year or next year?

Answer rating: 100% (QA)

If Rodney pays 40000 in Dec 40000 tax deduction will save him 4000028 1120... View the full answer