Tonya, who lives in California, inherited a $100,000 State of California bond in 2021. Her marginal Federal tax rate is 35%, she itemizes deductions on her Federal tax return, 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. What is the after-tax income from each bond? California bond: $ Corporate bond: $ U.S. government bond: $
Tonya, who lives in California, inherited a $100,000 State of California bond in 2021. Her marginal Federal tax rate is 35%, she itemizes deductions on her Federal tax return, 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. What is the after-tax income from each bond? California bond: $ Corporate bond: $ U.S. government bond: $
Chapter5: Gross Income: Exclusions
Section: Chapter Questions
Problem 51P
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Transcribed Image Text:Tonya, who lives in California, inherited a $100,000 State of California bond in 2021. Her marginal
Federal tax rate is 35%, she itemizes deductions on her Federal tax return, 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.
What is the after-tax income from each bond?
California bond: $
Corporate bond: $
U.S. government bond: $
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