Isabel, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Isabel, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late December she received a $43,000 bill from her accountant for consulting services related to her small business. Isabel can pay the $43,000 bill anytime before January 30 of next year without penalty. Assume her marginal tax rate is 37 percent this year and next year, and that she can earn an after-tax rate of return of 8 percent on her investments. a. What is the after-tax cost if Isabel pays the $43,000 bill in December? After-tax cost b. What is the after-tax cost if Isabel pays the $43,000 bill in January? Use Exhibit 3.1. (Round your answer to the nearest whole dollar amount.) After-tax cost Isabel, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late December she received a $75,000 bill from her accountant for consulting services related to her small business. Isabel can pay the $75,000 bill anytime before January 30 of next year without penalty. Assume her marginal tax rate is 37 percent this year and next year, and that she can earn an after-tax rate of return of 10 percent on her investments. a. What is the after-tax cost if Isabel pays the $75,000 bill in December? After-tax cost b. What is the after-tax cost if Isabel pays the $75,000 bill in January? Use Exhibit 3.1. (Round your answer to the nearest whole dollar amount.) After-tax cost Manny, a calendar-year taxpayer, uses the cash method of accounting for his sole proprietorship. In late December he performed $42,000 of legal services for a client. Manny typically requires his clients to pay his bills immediately upon receipt. Assume Manny's marginal tax rate is 37 percent this year and next year, and that he can earn an after-tax rate of return of 7 percent on his investments. a. What is the after-tax income if Manny sends his client the bill in December? After-tax income b. What is the after-tax income if Manny sends his client the bill in January? Use Exhibit 3.1. (Round your answer to the nearest whole dollar amount.) After-tax income Reese, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late December, she received a $14,000 bill from her accountant for consulting services related to her small business. Reese can pay the $14,000 bill anytime before January 30 of next year without penalty. Assume Reese's marginal tax rate is 32 percent this year and will be 37 percent next year, and that she can earn an after-tax rate of return of 8 percent on her investments. a. What is the after-tax cost if she pays the $14,000 bill in December? After-tax cost b. What is the after-tax cost if she pays the $14,000 bill in January? Use Exhibit 3.1. (Round your answer to the nearest whole dollar amount.) After-tax cost Isabel, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late December she received a $43,000 bill from her accountant for consulting services related to her small business. Isabel can pay the $43,000 bill anytime before January 30 of next year without penalty. Assume her marginal tax rate is 37 percent this year and next year, and that she can earn an after-tax rate of return of 8 percent on her investments. a. What is the after-tax cost if Isabel pays the $43,000 bill in December? After-tax cost b. What is the after-tax cost if Isabel pays the $43,000 bill in January? Use Exhibit 3.1. (Round your answer to the nearest whole dollar amount.) After-tax cost Isabel, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late December she received a $75,000 bill from her accountant for consulting services related to her small business. Isabel can pay the $75,000 bill anytime before January 30 of next year without penalty. Assume her marginal tax rate is 37 percent this year and next year, and that she can earn an after-tax rate of return of 10 percent on her investments. a. What is the after-tax cost if Isabel pays the $75,000 bill in December? After-tax cost b. What is the after-tax cost if Isabel pays the $75,000 bill in January? Use Exhibit 3.1. (Round your answer to the nearest whole dollar amount.) After-tax cost Manny, a calendar-year taxpayer, uses the cash method of accounting for his sole proprietorship. In late December he performed $42,000 of legal services for a client. Manny typically requires his clients to pay his bills immediately upon receipt. Assume Manny's marginal tax rate is 37 percent this year and next year, and that he can earn an after-tax rate of return of 7 percent on his investments. a. What is the after-tax income if Manny sends his client the bill in December? After-tax income b. What is the after-tax income if Manny sends his client the bill in January? Use Exhibit 3.1. (Round your answer to the nearest whole dollar amount.) After-tax income Reese, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late December, she received a $14,000 bill from her accountant for consulting services related to her small business. Reese can pay the $14,000 bill anytime before January 30 of next year without penalty. Assume Reese's marginal tax rate is 32 percent this year and will be 37 percent next year, and that she can earn an after-tax rate of return of 8 percent on her investments. a. What is the after-tax cost if she pays the $14,000 bill in December? After-tax cost b. What is the after-tax cost if she pays the $14,000 bill in January? Use Exhibit 3.1. (Round your answer to the nearest whole dollar amount.) After-tax cost
Expert Answer:
Answer rating: 100% (QA)
1 a pay 43000 bill in December 43000 tax deduction x 37 percent marginal tax rate 15910 in present v... View the full answer
Related Book For
Essentials of Federal Taxation 2018
ISBN: 9781260007640
9th edition
Authors: Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver
Posted Date:
Students also viewed these accounting questions
-
On June 30, Jeff, who uses the cash method of accounting, borrowed $25,000 from a bank for use in his business Jeff was to repay the loan in one payment with interest on December 30 of the same year....
-
If an entity uses the percentage-of-credit-sales method of accounting for uncollectible accounts, what are the effects on the financial statements if the entity consistently uses too low a percentage...
-
Isabel, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late December she received a $31,000 bill from her accountant for consulting services related to...
-
A 10.231-g sample of window cleaner containing ammonia was diluted with 39.466 g of water. Then 4.373 g of solution were titrated with 14.22 mL of 0.1063 M HCl to reach a bromocresol green end point....
-
In Section 9.3 we saw that it was preferable to transport SNMP messages in unreliable UDP datagrams. Why do you think the designers of SNMP chose UDP rather than TCP as the transport protocol of...
-
Paul Joubert retired from his firm. He has continued to hold his private retirement investments in a portfolio of common stocks and bonds. At the beginning of 2002, when he retired, his account was...
-
The following table gives the vapor pressure of water for various temperatures a. Plot a scatter diagram. Does it seem likely that a straight-line model will be adequate? b. Fit the straight-line...
-
Patriot Co. manufactures and sells three products: red, white, and blue. Their unit sales prices are red, $74; white, $108; and blue, $99. The per unit variable costs to manufacture and sell these...
-
John estimated the following cash flows (in $) for a project: A B 1 Year Cash flow 2 0 -5,700 3 1 1,325 4 2 2,148 5 3 3,528 The required return for the project is 8%. What is the IRR for the project?
-
Define a utility class for displaying values of type double. Call the class DoubleOut. Include all the methods from the class DollarFormat in Listing 6.14, all the methods from the class OutputFormat...
-
Acme Corporation has the following information related to its cash budget for the first three months of 2024. A schedule of cash receipts has been constructed and expected cash receipts for the first...
-
Suppose that the current spot price for an asset is \(S_{0}=\$ 50\), the current forward price for delivery in one year is \(F_{0}=\$ 53\), and the annual risk-free interest rate is \(3 \%\), with...
-
Suppose you are an analyst with the following data: r RF = 5.5%, r M - r RF = 6%, b = 0.8, D 1 = $1.00, P 0 = $25.00, g = 6%, and r d = firms bond yield = 6.5%. What is this firms cost of equity...
-
Robert divorced Laura in 2016. During 2018, per the divorce decree, Robert made the following payments: What is the amount Robert can deduct as alimony on his 2018 tax return? a. \(\$ 3,000\) b. \(\$...
-
Repeat Exercise 9.9 for the lowpass analysis filter equal to \[H_{0}(z)=\frac{1}{4} z^{-5}+z^{-3}+z^{-2}+z^{-1}+2\] Exercise 9.9 Consider a perfect reconstruction filter bank which satisfies the QMF...
-
Consider a perfect reconstruction filter bank which satisfies the QMF condition, \(H_{1}(z)=H_{0}(-z)\), and has the following lowpass analysis filter: \[H_{0}(z)=z^{-5}+5 z^{-3}+z^{-2}+6 z^{-1}+4...
-
You will select and demonstrate one of the interpersonal communication skills: rapport and respect building, attending skills, or responding skills. You will demonstrate competency of your selected...
-
The MIT Sloan School of Management is one of the leading business schools in the U.S. The following table contains the tuition data for the masters program in the Sloan School of Management. a. Use...
-
Read the following letter and help Shady Slim with his tax situation. Assume that gross income is $172,900 (which consists only of salary) for purposes of this problem. December 31, 2017 To the...
-
In 2017, Juanita is married and files a joint tax return with her husband. What is her tentative minimum tax in each of the following alternative circumstances? a. Her AMT base is $100,000, all...
-
Wood Corporation was a C corporation in 2016 but elected to be taxed as an S corporation in 2017. At the end of 2016, its earnings and profits were $15,500. The following table reports Wood's...
-
Find the conditional distribution of happiness by marital status for the data in Table 9. Then draw a bar graph that represents the conditional distribution of happiness by marital status. Approach...
-
One growing concern regarding the U.S. economy is the inequality in the distribution of income. The data in Table 1 represent the distribution of household income for various levels of income in...
-
One growing concern regarding the U.S. economy is the inequality in the distribution of income. An economist wants to know if the distribution of income is changing, so she randomly selects 1500...
Study smarter with the SolutionInn App