The Squeaks Cat Rescue, which is tax-exempt, issued debt last year at 9 percent to help finance a new animal shelter in Rocklin. a. If the rescue borrowed money this year, what would the after-tax cost of debt be, based on its cost last year and the 25 percent increase? b. If the receipts of the rescue were found to be taxable by the IRS (at a rate of 25 percent because of involvement in political activities), what would the after-tax cost of debt be?

The Squeaks Cat Rescue, which is tax-exempt, issued debt last year at 9 percent to help finance a new animal shelter in Rocklin. a. If the rescue borrowed money this year, what would the after-tax cost of debt be, based on its cost last year and the 25 percent increase? b. If the receipts of the rescue were found to be taxable by the IRS (at a rate of 25 percent because of involvement in political activities), what would the after-tax cost of debt be?

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter20: Income Taxation Of Trusts And Estates

Section: Chapter Questions

Problem 9DQ

See similar textbooks

Similar questions

Superior Developers sells lots for residential development. When lots are sold, Superior recognizes income for financial reporting purposes in the year of the sale. For some lots, Superior recognizes income for tax purposes when collected. In the prior year, income recognized for financial reporting purposes for lots sold this way was $20 million, which would be collected equally over the next two years. The enacted tax rate was 40%. This year, a new tax law was enacted, revising the tax rate from 40% to 35% beginning next year. Calculate the amount by which Superior should reduce its deferred tax liability this year.
The treasurer of New Semiconductor has a problem. The company has just ordered new assembly robotics for $3,500,000. The manufacturer would install the robotics for an additional $50,000. The treasurer does not know whether the Internal Revenue Service (IRS) will permit the company to treat this installation cost as a tax-deductible expense (end of Year 1) or view the installation as part of the capital investment. In the latter case, the company would capitalize the installation cost and depreciate the $50,000 along with the cost of the robotics according to the 5-year MACRS tax depreciation schedule: Year 1: 20% Year 2: 32% Year 3: 19.2% Year 4: 11.52% Year 5: 11.52% Year 6: 5.76% Assuming the tax rate is 35% and the discount rate is 5%, calculate: 1) the present value of the tax shields if the installation costs are expensed at the end of Year 1, and 2) the present value of the tax shields if the installation costs are capitalized and depreciated according to 5-year MACRS. a.…
am. 112.
A taxpayer is itemizing their return and they're trying to calculate the deductible amount of state income taxes paid. They have $4,000 from their Form(s) W-2 and they paid an outstanding balance in the current year for the prior year's balance of $2,500. What is the total amount of Line 5 income taxes that they can itemize? (Do not consider SALT limitations for this question) 2500 4000 6500
One of the initiatives of the Federal government in recent years was to increase the taxation paid by high income earners, while at the same time, not instituting any “tax hikes”. One way this was accomplished was to reduce the basic personal tax credit for individuals with income greater than $151,978 up to an income level of $216,511. In the following situation, you the taxpayer have an income level of $200,709. calculate and present your reduced non-refundable personal tax credit amount below.
Ed borrowed $10,000 to purchase City of Valdosta bonds. This year, he received $600 in City of Valdosta Bond interest on the bonds purchased. He also paid $500 in interest on the $10,000 loan. How much of the interest on the loan is deductible?
the tax cuts & jobs act enhanced the deduction for charitable contributions by raising the limit that can be contributed in any one year. the limit is now 60% of adjusted gross income (agi), up from 50%. assume your client still has a charitable deduction limitation due to their agi. the client might lose the charitable deduction because of achieving this limitation. recommend at least two tax planning strategies to avoid losing the deductions. provide support for your response.
If you qualified for the third stimulus check of $1,400 issued during the first or second quarter of 2021 and spent all of it on taxable items in your hometown with a sales tax rate of 9.23%, how much did you spend on your items and how much did you spend on taxes? Note: Round your final answers to the nearest cent. Amount spent on items Amount spent on taxes
Perkin Corporation has determined that it qualifies for a tax credit in the amount of $120,000. For the current year, it has tax liability before credits of $75,000. It expects at least that amount of tax liability next year. Required: If the excess credit is not refundable but may be carried forward, calculate the value of the credit. Assume Perkins uses a 4 percent discount rate to calculate present value. If the excess credit is refundable, what is the value of the credit?
7) Ms. Benoit is a self-employed architect who earns $300,000 annual taxable income. For the past several years, her tax rate on this income has been 35 percent. Because of recent tax law changes, Ms. Benoit’s tax rate for next year will decrease to 25 percent. a) Based on a static forecast, how much less revenue will the government collect from Ms. Benoit next year? b) How much less revenue will the government collect from Ms. Benoit next year if she responds to the rate decrease by working more hours and earning $375,000 taxable income? c) How much less revenue will the government collect from Ms. Benoit next year if she responds to the rate decrease by working fewer hours and earning only $275,000 taxable income?
Required: For the current tax year, discuss the deductibility of the interest payments, as well as the deductibility of the fees that were payable (citing authority ) . Damien owns a residential investment property that was unmortgaged. He agreed with the bank to borrow $400,000 with the investment property as security for the loan. This loan had a term of 30 years, and the loan set up costs, paid on 1 July of the current tax year, were $3000. Of the $400,000, $200,000 was used to buy shares listed on the stock exchange. He also used the other $200,000 to buy a new Porsche (for personal use). Total interest on the $400,000 for the tax year was $20,000. During the current tax year, Damien also borrowed another $2 million to buy a new investment property (a commercial premises which Damien rents out) which is secured by that commercial property. On 20 June 2024 (in the current tax year), Damien prepaid 3 years of interest on the commercial property loan -- specifically, he paid $300,000…
Wellness, Inc., a § 501(c)(3) organization, makes lobbying expendi- tures of $340,000 this year. Charitable expenditures were $600,000 for the first six months of the year and $950,000 for the last six months of the year. Determine the Federal income tax consequences to Wellness if: It does not make the § 501(h) lobbying election. It does make the § 501(h) lobbying election.