Question: Manny, a calendar-year taxpayer, uses the cash method of accounting for his sole proprietorship. In late December he performed $45,000 of legal services for a

Manny, a calendar-year taxpayer, uses the cash method of accounting for his sole proprietorship. In late December he performed $45,000 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 10 percent on his investments. Required: a. What is the after-tax income if Manny sends his client the bill in December? b. What is the after-tax income if Manny sends his client the bill in January? Use Exhibit 31 Note: Round your answer to the nearest whole dollar amount. c. Based on requirements a and b, should Manny send his client the bill in December or January? Complete this question by entering your answers in the tabs below. Required A Required B Required C Based on requirements a and b, should Manny send his client the bill in December or January? Year 4% 5% 6% 90 7% 8% 9% 10% 11% 12% 1 .962 .952 .943 .935 .926 .917 .909 .901 .893 2 925 .907 .890 .873 .857 .842 .826 .812 .797 3 .889 .864 .840 .816 .794 .772 .751 .731 .712 4 .855 .823 .792 .763 .735 .708 .683 .659 .636 5 .822 .784 .747 .713 .681 .650 .621 .593 .567 6 .790 .746 .705 .666 .630 .596 .564 535 .507 7 .760 .711 .665 .623 .583 .547 513 .482 .452 8 .731 .677 .627 582 .540 .502 .467 434 404 6 .703 .645 .592 544 .500 .460 .424 .391 .361 10 .676 .614 .558 .508 .463 .422 .386 .352 .322 11 .650 .585 .527 .475 .429 .388 .350 .317 .287 12 .625 .557 .497 444 .397 .356 319 .286 257 13 .601 .530 .469 .415 .368 .326 .290 .258 229 14 .577 .505 .442 .388 340 299 263 232 .205 15 .555 .481 .417 .362 .315 275 239 209 .183

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