Christopher is a self-employed cash-method, calendar-year taxpayer, and he made the following cash payments related to his business this year. Calculate the after-tax cost of each payment assuming Christopher has a 37 percent marginal tax rate. a) $500 fine for speeding while traveling to a client meeting. b) $800 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. c) $600 for office supplies in May of this year. He used half of the supplies this year and he will use the remaining half by February of next year.

Answers

Answer 1

Answer:

A. $500

B. $696

C. $378

Explanation:

Calculation to determine the after-tax cost of each payment

A. Based on the information given the AFTER-TAX COST will be $500 reason been that it is NOT DEDUCTIBLE based on the fact that fines and penalties does not provide a tax break

B. After-tax cost=$800 * [1-(0.5*0.37)]

After-tax cost=$800*(1-0.13)

After-tax cost=$800*0.87

After-tax cost=$696

Therefore After-tax cost is $696 reason been that HALF OF THE INTEREST will NOT be DEDUCTIBLE reason been that it was used to obtain NON-TAXABLE INCOME

C. After-tax cost=$600 * (1 - 0.37)

After-tax cost=$600*0.63

After-tax cost=$378

Therefore the After-tax cost is $378


Related Questions

Name any FIVE causes of stress in the workplace​

Answers

Answer:

1. long hours

2. tight deadlines

3. heavy workload

4. changes to duties

5. job insecurity

Bil Tarnofsky makes the following statement: 'We must become more flexible if we are to meet our personnel needs and maximize efficiency. In the past, we simply hired as many full-time employees as we thought we needed. But this focus has caused us to lose many valuable employees. We should offer flextime and job sharing options to help us keep and attract talented employees. "Margaret Robin responds by saying "Alternatives to traditional job design approaches can lead to significant cost savings. Next year we are expected to have 500 more employees than our current facility allows, but my analysis reveals that 600 of our employees could telecommute. Therefore, we can avoid costly actions such as moving our offices or building extensions if these workers became telecommuters, job sharing can also reduce facility costs as well as payroll costs. Tamnofsky and Robin would be most likely to disagree about which of the following questions?
A. Would telecommuting likely lead to cost savings?
B. Does the organization have a moral obligation to offer flextime and job sharing options?
C. If offering a job sharing option would not reduce costs, should the organization still offer it?
D. Would the organization be better able to keep valuable employees if it offered flextime and job sharing options?
E. Are any other organizational structure decisions important for the future of the organization?

Answers

Answer:

C. If offering a job sharing option would not reduce costs, should the organization offer it?

Explanation:

The statement Bil Tarnofsky makes is focused on retaining talented employees and attract new talented employees, by offering flextime and job sharing options

The statement Margaret Robin responds with is the use of alternative job design, such as telecommuting could achieve higher cost savings from the need to accommodate the 500 more employees, by moving the offices and expanding the buildings, in the coming year

Tamnofsky and Robin would be most likely to disagree on the different focus of their statements which are; If offering a job sharing option would not reduce costs, should the organization offer it?

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