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Business, 13.10.2020 04:01 aherrerasmile1

Reese, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late December, she received a $17,000 bill from her accountant for consulting services related to her small business. Reese can pay the $17,000 bill anytime before January 30 of next year without penalty. Assume Reese’s marginal tax rate is 32% this year and will be 37% next year, and that she can earn an after-tax rate of return of 11% on her investments. A. What is the after-tax cost if she pays the $31,000 bill in December?
B. What is the after-tax cost if she pays the $31,000 bill in January?

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Reese, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In...

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