Question: Decision Making Planning LO.1,LO.1,Explain the differences between the economic, accounting, and tax concepts of gross income. Describe the taxable years and tax accounting methods generally
Decision Making Planning LO.1,LO.1,Explain the differences between the economic, accounting, and tax concepts of gross income. Describe the taxable years and tax accounting methods generally available to taxpayers and other tax reporting entities. Identify tax planning strategies for minimizing gross income and the present value of the related tax. Harper is considering three alternative investments of $10,000. Assume that the taxpayer is in the 24% marginal tax bracket for ordinary income and 15% for qualifying capital gains in all tax years. The selected investment will be liquidated at the end of five years. The alternatives are: -A taxable corporate bond yielding 5.333% before tax, and the interest can be reinvested at 5.333% before tax. - A Series EE bond that will have a maturity value of $12,200 (a 4% before-tax rate of return). -Land that will increase in value. The gain on the land is classified and taxed as a long-term capital gain. The income from the bonds is taxed as ordinary income. How much must the land increase in value to yield a greater after-tax return than either of the bonds? For this analysis, ignore the effect of property taxes on the land. Use the future value tables in Appendix E as needed for your calculations and comparisons. Present your answers using spreadsheet software such as Microsoft Excel.
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