Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Manny, a calendar-year taxpayer, uses the cash method of accounting for his sole proprietorship. In late December he performed $31,000 of legal services for a
Manny, a calendar-year taxpayer, uses the cash method of accounting for his sole proprietorship. In late December he performed $31,000 of legal services for a client. Manny typically requires his clients to pay his bills immediately upon receipt. Assume Manny's marginal tax rate is 37 percent this year and next year, and that he can earn an after-tax rate of return of 5 percent on his investments. Required: a. What is the after-tax income if Manny sends his client the bill in December? b. What is the after-tax income if Manny sends his client the bill in January? Use Exhibit 3.1. Note: Round your answer to the nearest whole dollar amount. c. Based on requirements a and b, should Manny send his client the bill in December or January? Complete this question by entering your answers in the tabs below. Required A Required B Required C What is the after-tax incoine if Manny sends his client the bill in January? Use Exhibit 3.1. Note: Round your answer to the nearest whole dollar amount. After-tax income $ 26,534 < Required A Required C >
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started