Manny, a calendar-year taxpayer, uses the cash method of accounting for his sole proprietorship. In late December he performed$22,000 of legal services for a client. Manny typically requires his clients to pay his bills immediately upon receipt. Assume Manny'smarginal tax rate is 37 percent this year and next year, and that he can earn an after-tax rate of return of 8 percent on his investments.a. What is the after-tax income if Manny sends his client the bill in December?After-tax incomeb. What is the after-tax income if Manny sends his client the bill in January? Use Exhibit 3.1. (Round your answer to the nearest wholedollar amount.)After-tax incomec. Based on requirements a and b, should Manny send his client the bill in December or January?O DecemberO January

The taxpayer pays taxes on the income earned. The taxable income is computed after providing…

Manny, a calendar-year taxpayer, uses the cash method of accounting for his sole proprietorship. In late December he performed $22,000 of legal services for a client. Manny typically requires his clients to pay his bills immediately upon receipt. Assume Manny marginal tax rate is 37 percent this year and next year, and that he can earn an after-tax rate of return of 8 percent on his investme a. What is the after-tax income if Manny sends his client the bill in December? After-tax income b. What is the after-tax income if Manny sends his client the bill in January? Use Exhibit 3.1. (Round your answer to the nearest wh dollar amount.)

Manny, a calendar-year taxpayer, uses the cash method of accounting for his sole proprietorship. In late December he performed $22,000 of legal services for a client. Manny typically requires his clients to pay his bills immediately upon receipt. Assume Manny marginal tax rate is 37 percent this year and next year, and that he can earn an after-tax rate of return of 8 percent on his investme a. What is the after-tax income if Manny sends his client the bill in December? After-tax income b. What is the after-tax income if Manny sends his client the bill in January? Use Exhibit 3.1. (Round your answer to the nearest wh dollar amount.)

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter2: Income Tax Concepts

Section: Chapter Questions

Problem 20P: Sheila, a single taxpayer, is a retired computer executive with a taxable income of 100,000 in the...

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