what income tax savings could he expect by accelerating $8,000 of deductible expenditures planned for 2021 in the 2020 tax year?
what income tax savings could he expect by accelerating $8,000 of deductible expenditures planned for 2021 in the 2020 tax year?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
US Tax System
1.)Danny is a single taxpayer and has taxable income of $125,000 for 2020. If Danny anticipates a marginal tax rate of 22% in 2021, what income tax savings could he expect by accelerating $8,000 of deductible expenditures planned for 2021 in the 2020 tax year?
Expert Solution
Step 1
Calculate tax liability for Danny:
Tax liability = $14,605.16 + ($125,000 - $85,526) * 24%
Tax liability = $14,605.16 + $9,473.76
Tax liability = $24,078.92
Workings:
$14,605.16 = (($9,875 * 10%) + (($40,125 -$9,876) * 12%) + ($85,525 - $40,126)* 22%)
$14,605.16 = $987.50 +$3,629.88 + $9,987.78
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education