Tonya, who lives in California, inherited a $100,000 State of California bond in 2016. Her marginal Federal

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Tonya, who lives in California, inherited a $100,000 State of California bond in 2016. Her marginal Federal tax rate is 35%, and her marginal state tax rate is 5%. The California bond pays 3.3% interest, which is not subject to California income tax. She can purchase a corporate bond of comparable risk that will yield 5.2% or a U.S. government bond that pays 4.6% interest. Which investment will provide the greatest after-tax yield?
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South Western Federal Taxation 2017 Comprehensive

ISBN: 9781305874169

40th Edition

Authors: William H. Hoffman, David M. Maloney, William A. Raabe, James C. Young

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