Estimate tax benefit from the domestic production activities

Reference no: EM13906242

Andrew is considering starting a business of constructing and selling prefabri- cated greenhouses. There are three very different methods to constructing these greenhouses, and each method results in different revenue and cost projections. Below, Andrew has projected the qualifying revenue and costs for each method. The selling price includes qualifying receipts. The allocable expenses include wages and allocable expenses are included in total costs.

Method	Selling Price	Qualifying Receipts	TotalCost	Allocable Expenses	AllocableWages
#1	$13,000	$ 9,000	$6,500	$2,500	$2,000
#2	14,000	9,000	7,400	5,500	1,500
#3	15,000	14,000	8,600	2,000	1,000

a) Estimate the tax benefit from the domestic production activities deduction for each construction technique. You may assume that Andrew has sufficient AGI to utilize the deduction and that his marginal tax rate is 30 percent.

b) Which construction technique should Andrew use if his marginal tax rate is 30 percent?

Reference no: EM13906242

Questions Cloud

Features with the real life scenarios : Explain any three features that must be implemented by the application that will be created by WebSoft Solutions Pvt. Ltd. Support your answer with suitable examples. Relate the features with the real life scenarios

What is meant by the fear-crime paradox : Which of the following best describes the representation of the elderly in criminal victimization statistics relative to their presence in the overall population? What is meant by the fear-crime paradox

Ben needs cash fast and has asked lucy for a loan : Ben needs cash fast and has asked Lucy for a loan. Ben will willing to put up his PlayStation as collateral. Lucy has determined after a quick Internet search that Ben's PlayStation is worth $300.

Break-even point can be decreased by decreasing : Variable costs, as activity increases, will: A cost that increases in total, but not proportionately with increases in the activity level, is a(n): The assumptions that underlie basic CVP analysis include all of the following except: A company's brea..

Estimate tax benefit from the domestic production activities : Estimate the tax benefit from the domestic production activities deduction for each construction technique. You may assume that Andrew has sufficient AGI to utilize the deduction and that his marginal tax rate is 30 percent.

Compare and contrast the different stages of the business : Compare and contrast the different stages of the business cycle and how inflation and unemployment vary via these different stages. Then discuss the appropriate fiscal and monetary policies to address inflation and unemployment.

Prepare appropriate general journal entry for transaction : Listed below are the transactions that occurred in September 2006. Prepare the appropriate general journal entry for each transaction. Prepare an unadjusted trial balance. Post adjusting journal entries to the ledger accounts. Prepare an adjusted tri..

What is the average resource load factor? : What is the average resource load factor?

A machine can be purchased : A machine can be purchased for $ 150,000 and used for 5 years, yielding the following net incomes.

User Account

All Pages