Marginal tax bracket

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1. Inga, an attorney, completed a job for a client in November 2010. If she bills the client immediately, she will receive her $10,000 fee before the end of the year. By delaying the billing for a month, she will not receive the $10,000 until 2011. What factors should Inga consider in deciding whether she should delay sending the bill to the client?

2. Art is in the 28% marginal tax bracket for 2010. He owes a $10,000 bill for business expenses. Because he reports taxable income on a cash basis, he can deduct the $10,000 in either 2010 or 2011, depending on when he makes the payment. He can pay the bill at any time before January 31, 2011, without incurring the normal 8% interest charge. If he expects to be in a 33% marginal tax bracket for 2011, should he pay the bill and claim the deduction in 2010 or 2011?

Reference no: EM13972778

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