Mr. Nixon and Mr. Ryan are employed by HD Inc., which provides its employees with free parking.

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Mr. Nixon and Mr. Ryan are employed by HD Inc., which provides its employees with free parking. If the parking were not available, Mr. Nixon would pay $35 a month to a city garage. Mr. Ryan uses public transportation to commute. HD offers a complete family medical plan to its employees in which both Mr. Nixon and Mr. Ryan participate. Mr. Nixon's family consists of five people, while Mr. Ryan is single. Consequently, Mr. Nixon's annual cost of comparable medical insurance would be $9,000, and Mr. Ryan's cost would be just $4,100.

a. Mr. Nixon has a 24 percent marginal tax rate. How much additional salary would he have to earn to provide himself with parking and medical insurance?

b. Mr. Ryan has a 37 percent marginal tax rate. How much additional salary would he have to earn to provide himself with parking and medical insurance?

Assume the taxable year is 2018.

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a The aftertax value of the free parking is 420 35 nondeductible expense 12 months Assu...View the full answer

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Principles Of Taxation For Business And Investment Planning 2019 Edition

ISBN: 9781260161472

22nd Edition

Authors: Sally Jones, Shelley C. Rhoades Catanach, Sandra R Callaghan

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Question Posted: Jan 18, 2019 04:57 AM

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Mr. Nixon and Mr. Ryan are employed by HD Inc., which provides its employees with free parking.

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a The aftertax value of the free parking is 420 35 nondeductible expense 12 months Assu...View the full answer

Principles Of Taxation For Business And Investment Planning 2019 Edition

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