1.Zac, who is in the 24% marginal tax bracket, holds a stock with an adjusted basis of $50,000 that would sell today for $120,000; however, the stock has been held for only 9 months. How much decline in value can Zac afford to absorb and yet still be as well off on an after-tax basis in order to qualify for the 15% long-term rate?

2.Tom is considering making an investment in municipal bonds yielding 5%. What would the yield on a taxable bond have to be to provide a higher after-tax return than the municipal bond if Tom is in a 37% marginal tax rate bracket?