Taxable income and income tax liability

Assignment Help Accounting Basics

Reference no: EM13972780

1. Elki would like to invest $50,000 in tax-exempt securities. He now has the money invested in a certificate of deposit that pays 5.75% annually. What rate of in- terest would the tax-exempt security have to pay to result in a greater return on Elki's investment than the certificate of deposit? Work the problem assuming that Elki's mar- ginal tax rate is 15%, 25%, 28%, and 33%.

2. Leroy and Amanda are married and have three dependent children. During the current year, they have the following income and expenses:

Salaries	$110,000
Interest income	45,000
Royalty income	27,000
Deductions for AGI	3,000
Deductions from AGI	9,000

a. What is Leroy and Amanda's current year taxable income and income tax liability?

b. Leroy and Amanda would like to lower their income tax. How much income tax will they save if they validly transfer $5,000 of the interest income to each of their children? Assume that the children have no other income and that they are entitled to a $950 standard deduction but are not allowed a personal exemption deduction.

Reference no: EM13972780

Questions Cloud

Tax evasion or tax avoidance : For each of the following situations, state whether the taxpayer's action is tax evasion or tax avoidance.

Explain assess, and evaluate relevance to research project : An Annotated Bibliography is the result of a critical review of sources of information and the organization of those sources in preparation for writing the Research Project. The description and evaluation of sources allows students to choose speci..

Calculate the electric potential difference : A uniform electric field of magnitude 340 V/m is directed in the negative y direction as shown in the figure below. Calculate the electric potential difference VB

Finding taxable income and income tax liability : a. What is Tina's current year taxable income and income tax liability? b. Tina would like to lower her tax by incorporating Timely Turn Tables. How much income tax will she save if she incorporates TTT and pays herself a salary of $40,000?

Taxable income and income tax liability : What is Leroy and Amanda's current year taxable income and income tax liability?

Should the firm make this investment : Assume that this project requires a $400,000 investment today (or else the future cash flows will not happen). Should the firm make this investment?

Marginal tax bracket : 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

Assuming the projects are independent : Assuming the projects are independent, which one or ones would you recommend? If the projects are mutually exclusive, which would you recommend?

Health insurance premiums : Adco Corporation pays the health insurance premiums for all its employees. Adrian is an employee of Adco. Health insurance premiums Adco pays for Adrian cost $1,150 for the current year.

User Account

All Pages