Ms. Pay, who has a 40.8 percent marginal tax rate on interest income (37 percent income tax

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Ms. Pay, who has a 40.8 percent marginal tax rate on interest income (37 percent income tax + 3.8 percent Medicare contribution tax), owns HHL Inc. corporate bonds in her investment portfolio. She earned $74,800 interest this year on her HHL bonds. Compute her after-tax cash flow assuming that:

a. She received two semiannual cash payments of $37,400 each.

b. She instructed HHL to reinvest her interest payments in additional bonds.

c. The entire $74,800 represented amortization of OID.

Assume the taxable year is 2018.

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Principles Of Taxation For Business And Investment Planning 2019 Edition

ISBN: 9781260161472

22nd Edition

Authors: Sally Jones, Shelley C. Rhoades Catanach, Sandra R Callaghan

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