Question
A tax payer is considering two mutually exclusive alternatives . Alternative a is to hire a tax accountant at a cost of $20,000 to research
A tax payer is considering two mutually exclusive alternatives . Alternative a is to hire a tax accountant at a cost of $20,000 to research the tax law on a tax avoidance plan. If successful, the plan would save tax payer $21,000 in taxes. alternative b is to hire a marketing firm at the cost of $18,000 who task would be to develop a marketing plan for taxpayers product. If sucessful, the plan would reduce other advertising cost by $20,000 without affecting sales revenue. which alternative should tax payer choose if he or she faces a tax rate of 15% or 35%? Are these tax planning strategies tax favored activities for a or b?
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