Tommy (age 47) and his wife, Michelle (age 49), live in Columbus, Ohio, where Tommy works for Callahan Auto Parts (CAP) as the vice president of the brakes division. Tommy's 2020 salary is $360,000. CAP allows Tommy to participate in its nonqualified deferred compensation plan, in which participants can defer 15 percent of their salary for five years. Tommy also participates in CAP's qualified 401K) plan. Tommy's current marginal tax rate is 24 percent and CAP's current marginal tax rate is 21 percent. a. Assuming Tommy earns a 6 percent after-tax rate of return and be expects his marginal tax rate to be 30 percent in five years, what before-tax deferred compensation payment in five years would make him indifferent between receiving the deferred compensation payment or 15 percent of his salary now (Ignore payroll taxes)? b. Assuming CAP has an 8 percent after-tax rate of return and expects its marginal tax rate to be 35 percent in five years, how much would it be willing to pay in five years to be indifferent between paying the deferred compensation or paying 15 percent of Tommy's salary now (ignore payroll taxes)? c. Will Tommy and CAP be able to come to an agreement on deferring Tommy's salary? d. Assume that Tommy and Michelle have an Al of $107.000 before IRA deductions by either spouse. The AGI Includes $10,000 that Michelle eamed working part time (but she does not participate in an employer-sponsored retirement plan) Tommy and Michelle file a joint retum. What is the maximum deductible contribution Tommy and Michelle may make to a traditional IRA? e. Tommy has a balance of $55.000 in his traditional IRA, Due to some recent tax cuts, his marginal tax rate is 22 percent, so he would like to convert his traditional IRA into a Roth IRA What are the tax consequences to Tommy if he takes $55,000 out of the IRA. pays the taxes due from the traditional IRA distribution, and contributes what is left from the distribution to the Roth IRA? Reg A to B Reqc Reg D Reg E a. Assuming Tommy earns a 6 percent after-tax rate of return and he expects his marginal tax rate to be 30 percent in five years, what before-tax deferred compensation payment in five years would make him indifferent between receiving the deferred compensation payment of 15 percent of his salary now (ignore payroll taxes)? (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.) b. Assuming CAP has an 8 percent after-tax rate of return and expects its marginal tax rate to be 35 percent in five years, how much would it be willing to pay in five years to be indifferent between paying the deferred compensation or paying 15 percent of Tommy's salary now (ignore payroll taxes)? (Do not round intermediate calculations, Round your answer to the nearest whole dollar amount.) Show less Deferred compensation payment Deferred compensation payment Reqc > Answer is not complete. Complete this question by entering your answers in the tabs below. Req A to B Reqc Reg D Req! Assume that Tommy and Michelle have an AGI of $107,000 before IRA deductions by either spouse. The AGI includes $10,000 that Michelle earned working part time (but she does not participate in an employer Sponsored retirement plan). Tommy and Michelle file a joint return. What is the maximum deductible contribution Tommy and Michelle may make to a traditional IRA? Macmum deducible contribution Complete this question by entering your answers in the tabs below. Reg A to B Reac Ree D Real Tommy has a balance of $55,000 ili traditional TRATO to some recent tax cuts, his marginal taxes 22 percent, so he would to corwert his traditional IRA into a Roth IRA What are the tax consequences to Tommy he takes $55.000 out of the IRA, pays the taxes due from the traditional IRA distribution, and contributes what is from the distribution to the Roth TRAZ Show less Pony