How much in total will terrance gain

Reference no: EM131989412

Problem

Terrance Silva is the sole owner of a corporation that uses the cash-basis method of accounting. Terrance usually receives a $20,000 bonus in December from the corporation. However, Terrance is already in the 35% bracket and anticipates that his marginal tax bracket will drop to 33% next year, even if he defers receiving the bonus until January. Terrance believes he can invest any tax savings to get a 6% return. How much in total will Terrance gain if he defers the bonus until January?

Reference no: EM131989412

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