Hugh has the choice between investing in city of Heflin bond at 77 percent or investing in surething incorporated bond at 10.7 percent. Assuming that both bonds have the same no tax charlatans that Hugh has a 40 percent marginal tax rate, in which bond should he invest?
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- 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. Below are the factors for the compound amount of $1 and compound value of annuity payments at the end of five years: Interest Rate 4% 5% $1 Compounded for Five Years…Marc, a single taxpayer, earns $64,800 in taxable income and $5,480 in interest from an investment in city of Birmingham bonds. Using the U.S. tax rate schedule for 2023, what is his average tax rate? Individuals Schedule X-Single If taxable income is over: But not over: The tax is: $ 0 $ 11,000 10% of taxable income $ 11,000 $ 44,725 $1,100 plus 12% of the excess over $11,000 $ 44,725 $ 95,375 $5,147 plus 22% of the excess over $44,725 $ 95,375 $ 182,100 $16,290 plus 24% of the excess over $95,375 $ 182,100 $ 231,250 $37,104 plus 32% of the excess over $182,100 $ 231,250 $ 578,125 $52,832 plus 35% of the excess over $231,250 $ 578,125 — $174,238.25 plus 37% of the excess over $578,125 a)14.76 percent b)12.08 percent c)11.85 percent d)22.00 percent e)None of the choices are correct.Tonya, who lives in California, inherited a $100,000 State of California bond in 2021. Her marginal Federal tax rate is 35%, she itemizes deductions on her Federal tax return, and her marginal state tax rate is 5%. The California bond pays 3.3% interest, which is not subject to California income tax. She can purchase a corporate bond of comparable risk that will yield 5.2% or a U.S. government bond that pays 4.6% interest. What is the after-tax income from each bond? California bond: $ Corporate bond: $ U.S. government bond: $
- 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? Below are the factors for the compound amount of $1 and compound value of annuity payments at the end of five years: Interest Rate $1 Compoundedfor Five Years $1 Annuity Compoundedfor Five Years 4% 1.2167 5.4163 5%…Chuck, a single taxpayer, earns $79,800 in taxable income and $15,900 in interest from an investment in City of Heflin bonds. (Use the U.S. tax rate schedule.) W Required: a. If Chuck earns an additional $40,000 of taxable income, what is his marginal tax rate on this income? b. What is his marginal rate if, instead, he had $40,000 of additional deductions? Note: For all requirements, do not round intermediate calculations. Round percentage answers to 2 decimal places. a. Marginal tax rate b. Marginal tax rate % %Hugh has the choice between investing in a City of Heflin bond at 5.25 percent or investing in a Surething Incorporated bond at 7.75 percent. Assuming that both bonds have the same nontax characteristics and that Hugh has a 40 percent marginal tax rate, what interest rate does Surething Incorporated need to offer to make Hugh indifferent between investing in the two bonds? (Round your answer to 2 decimal places.) Answer: Interest Rate %
- Liam has a gross income of $120,000 and takes the standard deduction. 1) What are his total taxes due? 2) What is his marginal tax rate? 3) What is his effective tax rate? Round to the neared hundredth of a percent.Chuck, a single taxpayer, earns $78,400 in taxable income and $13,800 in interest from an investment in City of Heflin bonds. A. If Chuck earns an additional $40,000 of taxable income, what is his marginal tax rate on this income? B. What is his marginal rate if, instead, he had $40,000 of additional deductions?Andrea would like to organize SHO as either an LLC (taxed as a sole proprietorship) or a C corporation. In either form, the entity is expected to generate an 11 percent annual before-tax return on a $350,000 investment. Andrea’s marginal income tax rate is 35 percent and her tax rate on dividends and capital gains is 15 percent. Andrea will also pay a 3.8 percent net investment income tax on dividends and capital gains she recognizes. If Andrea organizes SHO as an LLC, Andrea will be required to pay an additional 2.9 percent for self-employment tax and an additional 0.9 percent for the additional Medicare tax. Further, she is eligible to claim the full deduction for qualified business income. Assume that SHO will pay out all of its after-tax earnings every year as a dividend if it is formed as a C corporation. (Do not round intermediate calculations and round your final answers to the nearest whole dollar.) a. How much cash after taxes would Andrea receive from her investment in…
- Cory recently sold his qualified small business stock for $87,000 after holding it for 10 years. His basis in the stock is $43,000. Applying the rules as if the stock were acquired in 2022 and assuming his marginal tax rate is 32 percent, how much tax will he owe on the sale?Chuck, a single taxpayer, earns $75,200 in taxable income and $10,200 in interest from an investment in City of Heflin bonds. (Use the U.S. tax rate schedule.) Required: If Chuck earns an additional $40,000 of taxable income, what is his marginal tax rate on this income? What is his marginal rate if, instead, he had $40,000 of additional deductions? Note: For all requirements, do not round intermediate calculations. Round percentage answers to 2 decimal places.If Isabella Rodriguez is single and in the 22 percent tax bracket, calculate the tax associated with each of the following transactions. (Hint: Use the IRS regulations for capital gains in effect in 2018.) Treat each of the following cases as independent of the others. Tax savings should be preceded by a "-" sign. Round the answers to the nearest cent. She sold stock for $3,025 that she purchased for $2,500 3 months earlier. $ She sold bonds for $3,000 that she purchased for $2,500 3 years earlier. $ She sold stock for $3,080 that she purchased for $4,000 20 months earlier. Assume this to be the only Stock in Isabella's portfolio. $
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