Jill Clark invested $25,850 in the bonds of Industrial Aromatics, Inc. She held them for 13 months, at the end of which she sold them for $26,701. During the period of ownership she received $1,906 interest. Calculate the pretax and after-tax HPR on Jill's investment. Assume that she is in the 31% ordinary tax bracket (federal and state combined) and pays a 15% capital gains rate on dividends and on capital gains for holding periods longer than 12 months. The pretax HPR is%. (Round to two decimal places.)

Jill Clark invested $25,850 in the bonds of Industrial Aromatics, Inc. She held them for 13 months, at the end of which she sold them for $26,701. During the period of ownership she received $1,906 interest. Calculate the pretax and after-tax HPR on Jill's investment. Assume that she is in the 31% ordinary tax bracket (federal and state combined) and pays a 15% capital gains rate on dividends and on capital gains for holding periods longer than 12 months. The pretax HPR is%. (Round to two decimal places.)

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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An investor who is in a 33% tax bracket for normal (ordinary) income buys a stock for $5,000 and sells it for $9,000. How much will her tax obligation be if she holds the stock for:(a) 6 months?(b) 14 months?
Samantha lives under an imputation tax system. Her income tax rate is 35%, which applies to all of her income, including wages, interest income and dividend income. Samantha owns 2000 shares of Rio Inc. which has 3.2 billion shares outstanding and taxable income of $1.8 billion (in the current year). Rio’s pays corporate tax rate at 30% and its payout ratio in the past has been 80%. Rio has just announced that it will maintain the past payout ratio and all dividends (to be paid next month) will be fully franked. Given this information, if Samantha had lived under a classical tax system, which of the following is closest to the additional tax she would have to pay as a Rio shareholder? a.$220.50 b.$146.25 c.$175.50 d. None of the other answers e.$45.00
Provide calculation
Mary, a taxpayer in the 35 percent marginal tax bracket, borrows $500,000 at 10 percent interest to invest in 7 percent tax-exempt municipal bonds. The annual interest expense on the loan is $50,000. Mary earns $35,000 interest income on the bonds. What is Mary’s interest expense deduction?
Margaret Lindley paid $15,190 of interest on her $301,900 acquisition debt for her home (fair market value of $501,900), $4,190 of interest on her $30,190 home-equity debt used to buy a new boat and car, $1,190 of credit card interest, and $3,190 of margin interest for the purchase of stock. Assume that Margaret Lindley has $10,190 of interest income this year and no investment expenses. How much of the interest expense may she deduct this year? $23,760 $22,570 $19,380 $18,380 None of the choices are correct.
Helen holds 1,000 shares of Fizbo Incorporated stock that she purchased 11 months ago. The stock has done very well and has appreciated $20/share since Helen bought the stock. When sold, the stock will be taxed at capital gains rates (the long-term rate is 15 percent and the short-term rate is the taxpayer's marginal tax rate). Ignore the time value of money. a. If Helen's marginal tax rate is 35 percent, how much would she save by holding the stock an additional month before selling? Tax savings b. What might prevent Helen from waiting to sell? Helen bears if she holds the stock for an additional month. The stock price could substantially if there is market volatility or if the company encounters financial difficulties. In addition, Helen may be selling the stock for which she may be unwilling to wait.
Jackson has the choice to invest in city of Mitchel bonds or Sundial Incorporated corporate bbonds that pay 7 percent interest. Jackson is a single taxpayer who carns $55,500 annually Assume that the city of Mitchell bands and the Sundial, Incorporated boonds fave sirvailar. What interest rate would the city of Mitchell have to pay in order to make Jackson indifferent between investing in the city of MItchell and the Sundial, Incorporated bonds for 2020? (Use tax rate schedule)
Jake sold stocks shares he had owned 3 years. Jake is in the 35% marginal tax bracket and his capital gains from this sale were $28,998. How much tax would jake owe on those gains?
Munabhai
Sahara is an enterprising young woman (age 14). Her math tutoring service will generate $8,400 this year. She has her prior taxed earnings ($7,500) invested in a convertible bond fund that will generate 5% interest and 6% capital gains this year. How much of her income is taxable?
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 $240,000 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 .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 its all of its after-tax earnings every year as a dividend if it is formed as a C corporation. How much cash after-taxes would Amanda receive from her investment in the first year if SHO is organized as an LLC? Same facts as in Question 1 above. How much cash…
Godo

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