For each of the following scenarios, indicate which 1 of the 4 basic tax planning variables (entity, character, time period, jusrisdiction) impacts after-tax value. Note that more than 1 may apply to any scenario; identify ALL that are relevant.

a. Aloha Corp is considering building a new manufacturing facility in either State U or State P. State U has a 10% state income tax rate. State P has a 15% state income tax rate but offers a tax holiday for new business invesment that would exempt up to $250,000 of Aloha's earnings from state income tax for the 1st five year of operations in State P.

Entity Variable

Character variable

Time period variable

Jurisdiction variable

b. Mary wishes to help her nephew, Gill, pay his college tuition. Instead of giving Gill cash, Mary gives him bonds earning $10,000 annual interest income. Mary's marginal tax rate is 35%, and Gill's marginal tax rate is 12%.

Entity Variable

Character variable

Time period variable

Jurisdiction variable

c.Congress has recently enacted a decrease in corp tax rates that will take effect at the beginning of next year. Grant Co, a cash basis taxpayer, is planning to pay expenses prior to year-end in order to maximize its tax savings in the current year.

Entity Variable

Character variable

Time period variable

Jurisdiction variable

d. Will has $50,000 to invest in the stock market. He is considering 2 alternatives. Stock A pays annual qualifying dividends of 6%. Stock B pays no dividends but is expected to increase in value at a rate of 5% per year. Will would hold either investment for a minmum of 4 years. Will's marginal tax rate on ordinary income is 35%.

Entity Variable

Character variable

Time period variable

Jurisdiction variable