On June 30, 2022, Kelly sold property for $240,000 cash and a $960,000 note due on September 30, 2023. The note pays 6% interest, which is higher than the Federal rate. Kelly’s cost of the property was $400,000. She is concerned that Congress may increase the tax rate that will apply for the year when the note is collected. Kelly’s after-tax rate of return on investments is 6%. 

a. What can Kelly do to avoid the expected higher tax rate?

b. Assuming that Kelly’s marginal combined Federal and state tax rate is 25% in 2022, how much would the tax rates need to increase to make the option identified in part (a) advisable?