Pretax rate of return and the after tax rate

Reference no: EM131048854

Taxpayer invests $100,000 in a partnership. The taxpayer faces a personal tax rate of 70% and a tax rate on capital gains of 28%. In the first year, the partnership spends the entire $100,000 on research, which the tax payer can claim as a deduction against her other income. In the 2nd year, the partnership sells the developed technology, and the taxpayers share of the sale price is $50,000, which is taxed as a capital gain. What is the pretax rate of return and the after tax rate?

Reference no: EM131048854

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