Haru is a self-employed cash-method, calendar-year taxpayer, who made the following cash payments related to his business this year. Calculate the after-tax cost of each payment assuming Haru has a 37 percent marginal tax rate. Note: Do not round intermediate calculations and round your final answer to the nearest whole dollar amount. a. $2,600 fine for speeding while traveling to a client meeting. b. $2,900 of interest on a short-term loan incurred in September and repaid in November. Half of the loan proceeds was used immediately to pay salaries and the other half was invested in municipal bonds until November. d. $1,500 for several pairs of work boots. Haru expects to use the boots about 85 percent of the time in his business and the remainder of the time for hiking. Consider the boots to be a form of clothing.
Haru is a self-employed cash-method, calendar-year taxpayer, who made the following cash payments related to his business this year. Calculate the after-tax cost of each payment assuming Haru has a 37 percent marginal tax rate. Note: Do not round intermediate calculations and round your final answer to the nearest whole dollar amount.
a. $2,600 fine for speeding while traveling to a client meeting.
b. $2,900 of interest on a short-term loan incurred in September and repaid in November. Half of the loan proceeds was used immediately to pay salaries and the other half was invested in municipal bonds until November.
d. $1,500 for several pairs of work boots. Haru expects to use the boots about 85 percent of the time in his business and the remainder of the time for hiking. Consider the boots to be a form of clothing.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
