Question

# Christopher is a cash-method, calendar-year taxpayer, and he made the following cash payments related to his...

Christopher is a cash-method, calendar-year taxpayer, and he made the following cash payments related to his business this year.

Calculate the after-tax cost of each payment assuming he has a 30 percent marginal tax rate. (Do not round intermediate calculations and round your final answer to the nearest dollar amount.)

b. \$700 of interest on a short-term loan incurred in September and repaid in November. Half of the loan proceeds were used immediately to pay salaries and the other half was invested in municipal bonds until November.

c. \$1,055 for office supplies in May of this year. He used half of the supplies this year and he will use the remaining half by February of next year.

d. \$830 for several pairs of work boots. Christopher expects to use the boots about 80 percent of the time in his business and the remainder of the time for hiking. Consider the boots to be a form of clothing.

#### Homework Answers

Answer #1

Solution:-

b. \$700 of interest on a short-term loan incurred in September and repaid in November. Half of the loan proceeds were used immediately to pay salaries and the other half was invested in municipal bonds until November:-

After-tax cost - \$595

Explanation:-

\$595 = \$700 × [1 - (0.5 × 0.3)] - half of the interest is not deductible.

c. \$1,055 for office supplies in May of this year. He used half of the supplies this year and he will use the remaining half by February of next year:-

After-tax cost - \$739

Explanation:-

\$739 = \$1,055 × (1 - 0.3) - all deductible since used within the next year.

d. \$830 for several pairs of work boots. Christopher expects to use the boots about 80 percent of the time in his business and the remainder of the time for hiking. Consider the boots to be a form of clothing:-

After-tax cost - \$830

Explanation:

\$830 - not deductible.

Know the answer?
Your Answer:

#### Post as a guest

Your Name:

What's your source?

#### Earn Coins

Coins can be redeemed for fabulous gifts.

##### Not the answer you're looking for?
Ask your own homework help question
ADVERTISEMENT
##### Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

ADVERTISEMENT
##### Active Questions
• Researchers hypothesized that increasing a woman's level of arousal would increase her perceptions of attractiveness of...
asked 15 minutes ago
• Equation 37-14b in the textbook gives the energy emitted by Hydrogen when electrons transition between states...
asked 15 minutes ago
• Theory of Computation Please provide explanation too on how it works a. Give an NFA recognizing...
asked 16 minutes ago
• Question 1 A sequential pattern detection circuit (state machine) has input A and output Y, which...
asked 19 minutes ago
• Natural Foods Inc. is planning to invest in new manufacturing equipment to make a new garden...
asked 39 minutes ago
• Explain why a callable bond's price would be expected to decline less than an otherwise comparable...
asked 1 hour ago
• . What are the three types of pricing strategies services that services employ? Using a real...
asked 1 hour ago
• Given a search problem where some elements are searched more than others, it is more important...
asked 1 hour ago
• Suppose a consumer views two goods, X and Y, as perfect complements. Her utility function is...
asked 1 hour ago
• Describe how propinquity can perpetuate and increase perceived similarity in our friendships. Describe how similarity can...
asked 1 hour ago
• For explaining the pressure / stress phenomenon, analyze three cases given below: (also include a sketch...
asked 2 hours ago
• 1. Pat’s Petunias : You have been called in as a network consultant by your cousin...
asked 2 hours ago