Q)Suppose that in 2018 the price index was 120 and Ifikile purchased R35 000 worth of bonds. One year later (i.e., in 2019) the price index was 126. Ifikile redeemed her bonds for R39 725. It was noted that Ifikile was in the 40% tax bracket. What was Ifikile’s real after-tax rate of interest to the nearest tenth of a percent
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- Marlene, a cash basis taxpayer, invests in Series EE U.S. government savings bonds and bank certificates of deposit (CDs). Determine the tax consequences of the following on her 2019 gross income: a. On September 30, 2019, she cashed in Series EE bonds for 10,000. She purchased the bonds in 2009 for 7,090. The yield to maturity on the bonds was 3.5%. b. On July 1, 2018, she purchased a CD for 10,000. The CD matures on June 30, 2020, and will pay 10,816, thus yielding a 4% annual return. c. On July 1, 2019, she purchased a CD for 10,000. The maturity date on the CD was June 30, 2020, when Marlene would receive 10,300.On June 30, 2019, Kelly sold property for 240,000 cash and a 960,000 note due on September 30, 2020. The note will also pay 6% interest, which is slightly higher than the Federal rate. Kellys cost of the property was 400,000. She is concerned that Congress may increase the tax rate that will apply when the note is collected. Kellys after-tax rate of return on investments is 6%. a. What can Kelly do to avoid the expected higher tax rate? b. Assuming that Kellys marginal combined Federal and state tax rate is 25% in 2019, how much would the tax rates need to increase to make the option identified in part (a) advisable?Suppose that in 2018 the price index was 120 and Ifikile purchased R35 000 worth of bonds. One year later (i.e., in 2019) the price index was 126. Ifikile redeemed her bonds for R39 725. It was noted that Ifikile was in the 40% tax bracket. What was Ifikile’s real after-tax rate of interest to the nearest tenth of a percent?
- On July 1, 2020, Katrina purchased tax-exempt bonds (face value of $89,500) for $98,450. The bonds mature in five years, and the annual interest rate is 3%. a. How much interest income and/or interest expense must Katrina report in 2020? The interest income Katrina must include in gross income in 2020 is $________ The interest expense Katrina may deduct in 2020 is $_______ b. What is Katrina's adjusted basis for the bonds on January 1, 2021? $_______An investor who is in a 33% tax bracket for normal (ordinary) income buys a stock for $5,000 and sells it for $9,000. How much will her tax obligation be if she holds the stock for:(a) 6 months?(b) 14 months?At the beginning of his current tax year, David invests $11,550 in original issue U.S. Treasury bonds with a $10,000 face value that mature in exactly 10 years. David receives $820 in interest ($410 every six months) from the Treasury bonds during the current year, and the yield to maturity on the bonds is 6.2 percent. (Round your intermediate calculations to the nearest whole dollar amount.) b. How much interest will he report this year if he does not elect to amortize the bond premium?
- At the beginning of her current tax year, Angela purchased a zero-coupon corporate bond at original issue for $50,000 with a yield to maturity of 5 percent. Given that she will not actually receive any interest payments until the bond matures in 18 years, how much interest income will she report this year assuming semiannual compounding of interest?At the start of the 2019 tax year, Franny had $40,000 trading stock on hand in her café. Throughout the year she bought a further $150,000 worth of trading stock and recorded sales of $280,000. On 30 June 2019, she had trading stock on hand valued at $50,000. What is Franny’s Taxable Income for the 2019 financial year? Select one: a. $280,000 b. $200,000 c. $140,000 d. $130,000At the beginning of his current tax year, David invests $12,840 in original issue U.S. Treasury bonds with a $10,000 face value that mature in exactly 20 years. David receives $580 in interest ($290 every six months) from the Treasury bonds during the current year, and the yield to maturity on the bonds is 3.8 percent. Note: Round your intermediate calculations to the nearest whole dollar amount. a. How much interest income will he report this year if he elects to amortize the bond premium?
- Dana intends to invest $60,000 in either a Treasury bond or a corporate bond. The Treasury bond yields 5 percent before tax and the corporate bond yields 6 percent before tax. Required: a-1. Assuming Dana’s federal marginal rate is 24 percent and her marginal state rate is 5 percent, which of the two options should she choose? Assume that Dana itemizes deductions. a-2. How much interest after-tax would Dana earn by investing in the corporate bond? Note: Do not round intermediate calculations and round your final answer to the nearest whole dollar amount. b-1. If she were to move to another state where her marginal state rate would be 10 percent, which of the two options should she choose? Assume that Dana itemizes deductions. b-2. How much interest after-tax would Dana earn by investing in the corporate bond as per requirement b-1? Note: Do not round intermediate calculations and round your final answer to the nearest whole dollar amount.Bonnie paid $9,200 for corporate bonds that have a par value of $10,000 and a coupon rate of 8.6 percent, payable quarterly. Bonnie received her first interest payment after holding the bonds for three months and then sold the bonds for $9,421. Part 2 If Bonnie is in a 33 percent marginal tax bracket for federal income tax purposes, what are the tax consequences of her ownership and sale of the bonds?Assume that an individual owns a bond that they purchased for $100,000. The bond has a 10% coupon. The bond will mature in three years and is currently selling for $125,000. What tax planning technique can the investor utilize?