Use $2023$ tax rules $$ round dollar answers to nearest dollar and percentages to two decimals.

$1.4$ points Based only on the information provided for each scenario, determine whether Eddy or Scott will benefit more from the timing strategy and why there will be a benefit to that person.

a$.$ Eddy has a $40\%$ tax rate, and Scott has a $30\%$ tax rate.

b$.$ Eddy and Scott each have a $40\%$ tax rate. Eddy has $$10,000$ of income that could be deferred; Scott has $$20,000$ of income that could be deferred.

c$.$ Eddy and Scott each have a $40\%$ tax rate and $$20,000$ of income that could be deferred. Eddy$$s after$-$tax rate of return is $10\%,$ and Scott$$s after$-$tax rate of return is $12\%.$

d$.$ Eddy and Scott each have a $40\%$ tax rate, $$20,000$ of income that could be deferred, and an after$-$tax rate of return of $10\%.$ Eddy can defer income up to two years, and Scott can defer income up to three years.

a$.$ Answer here $($Eddy or Scott$)$ and a reason.

b$.$ Answer here $($Eddy or Scott$)$ and a reason.

c$.$ Answer here $($Eddy or Scott$)$ and a reason.

d$.$ Answer here $($Eddy or Scott$)$ and a reason.

$2.2$ points Antonella works for a company that pays an annual year$-$end bonus. Assume that Antonella expects to receive a $$15,000$ bonus on December $28$th of this year, her tax rate is $32\%,$ and her after$-$tax rate of return is $6\%.$

a$.$ If Antonella$$s employer paid her bonus on January $1$st of next year instead of in December, how much would this action save Antonella in today$$s tax dollars?

b$.$ If Antonella$$s tax rate decreased to $28\%$ next year, how much would she save or lose by deferring until January?

a$.$ Answer here in dollars.

b$.$ Save or lose and dollars.

$3.1$ point Rodney, a cash$-$basis taxpayer, owes $$60,000$ in tax$-$deductible consulting fees for his business. Assume that it is December $28$th and that Rodney can avoid any finance charges if he pays the accounting fees by January $10$th$.$ Rodney$$s tax rate this year is $32\%,$ and his after$-$tax rate of return is $6\%.$ What tax rate next year will make Rodney indifferent between paying the consulting fees this year or next year? $($Round discount factor$($s$)$ to three decimal places, round final answer to $1$ decimal place.$)$

Answer tax rate here rounded to two decimals.

$4.3$ points Susan Brown has decided that she would like to return to school after her kids leave home in five years. To save for her education, Susan would like to invest $$15,000$ in an investment that provides a high return. If her marginal tax rate is $28\%,$ what is Susan$$s after$-$tax rate of return for the following investment options? Qualified dividends are taxed at $15\%.$ Please take percentages out to two decimal places.

a$.$ Corporate bond issued at face value with a $7\mathrm{.}5\%$ stated interest rate payable annually.

b$.$ Dividend$-$paying stock with an annual $6\mathrm{.}5\%$ dividend.

c$.$ Which should she invest in$?$

a$.$ Effective rate here.

b$.$ Effective rate here.

c$.$ Answer here: Bond or Stock.

$5.3$ points For the following taxpayers, indicate whether the taxpayer should file a tax return and why.

a$.$ Robert earned $$50,000$ this year as a staff accountant. His estimated tax liability is $$4,500,$ and he expects to receive a $$500$ tax refund.

b$.$ Amy earned $$4,000$ this year working part$-$time. She will have no federal tax liability and has not made any federal tax payments, and will qualify for no federal tax credits.

c$.$ Ty earned $$2,500$ this summer and had $$200$ of federal taxes withheld from his paycheck. He will have no federal tax liability this year.

a$.$ Answer here.

b$.$ Answer here.

c$.$ Answer here.

$6.2$ points For the $2023$ tax returns indicate when the statute of limitations expires and why.

a$.$ Phoenix filed his tax return on February $28$th$,2024.$

b$.$ Jill and Randy filed their tax return on August $16$th$,2024.$

c$.$ Although required to file, Catherine chose not to file a tax return this year because she was expecting a tax refund and could not pull together all the information needed to file the return.

d$.$ Jerry filed his tax return on May $22$nd$,2024,$ but has accidentally underreported his taxable income by $20\%.$

a$.$ Answer here.

b$.$ Answer here.

c$.$ Answer here.

d$.$ Answer here.