Reese, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late December,
Question:
Reese, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late December, she received a $20,000 bill from her
accountant for consulting services related to her small business. Reese can pay the $20,000 bill anytime before January 30 of next year without penalty.
Assume Reese’s marginal tax rate is 32 percent this year and will be 37 percent next year, and that she can earn an after tax rate of return of 12 percent on her investments. When should she pay the $20,000 bill—this year or next?
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Option 1 Pay 20000 bill in December 20000 tax deduction x 32 percent m...View the full answer
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Related Book For 
Essentials Of Federal Taxation 2019
ISBN: 9781260190045
10th Edition
Authors: Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver
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