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Solnce55 [7]
3 years ago
10

SMITH FAMILY'S 2018 TAX SCENARIOJoseph L. Smith (age 45, Social Security number 145-26-9210) and Rita M. Smith (age 43, Social S

ecurity number 142-46-5108) are husband and wife. They live at 1650 Belmont Avenue, Chicago, IL 60615. David is a self-employed CPA and Rita is a third grade teacher. They have two children: Blake (age 5, Social Security number 310-51-2108) and Amelia (age 3, Social Security number 314-62-8924).In 2018, Joseph earned $182,000 and Rita earned $46,000. The Smith family has medical coverage through the school system for which Rita works. As an employee, Rita had $9,500 of federal tax withheld, $2,300 of IL state tax withheld, and the required Social Security and Medicare taxes.Joseph has an office with business expenses for 2018 as follows:Item AmountOffice Rent $24,000Office Supplies $8,000Internet Charges $1,2000Phone System Charges $4,800Advertising Expenses $1,800Postage Charges $1,500Audit/Tax Software Charges $20,000Business Gifts $400The advertising expenses included local newspaper advertisements, digital marketing, and direct marketing flyers. The business gifts were $40 gift certificates given to his 10 largest clients in appreciation for their business.Joseph purchased a 2017 Honda Civic in 2017. In 2018, he drove 24,000 business miles and 6,000 personal miles, and uses the standard mileage method for tax purposes.In 2018, Joseph made estimated quarterly federal tax payments of $18,000/quarter and estimated quarterly IL state tax payments of $3,000. All the payments were made within calendar 2018. Joseph also contributed $8,000 to his SEP account.Rita bought various supplies for her classroom, but did not closely track expenditures and thus only wants to take the allowed educator expenses deduction. Her teacher's license was also renewed in 2018 for $125.Blake and Amelia are both in day care at the Riley Day Care Center at 1325 Lake Street, Chicago, IL 60612 (EIN 36-2875647). They are only in day care for 9 months of the year (weekly charge of $240.00/week), because Rita does not work during the summer.In addition to the wages and expenses as detailed, the Smiths have the following documented income and expenses:Item AmountInterest income from CDs $1,800Interest Income from Series EE $4,000Government Bonds Mortgage Interest on Principal Residence $15,000Property taxes on Residence $8,000PMI Insurance Payments $3,000Cash Charitable Contributions $2,500Non-Cash Contributions (Used Clothing to Salvation Army) $350The Smiths itemized deductions in 2017. The federal tax refund was $3,500 and the IL state tax refund was $600.In addition, the Smiths own rental property (a "two flat" in Chicago) which they have rented out for the entire year. Total rental income was $30,000. Rental property related expenses were as follows:Item AmountMortgage Interest on Rental Property $13,000Property Tax $9,000Repairs on Rental Units $2,6000Depreciation on Rental Units (using SL Depreciation) $3,500Utilities $3,000Landscaping $500
Business
1 answer:
Neporo4naja [7]3 years ago
7 0

Answer:

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How could government – sponsored grants for the private development of new technologies result in a lower national debt?
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Virginia supply offers their customers trade credit with terms 2/15, net 30. this implies that:
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Another company plans to issue 20-year bonds with a face value of $1,000 and an annual coupon rate of 10%. The market price of s
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The after-tax cost of debt is 6.28%.  Subtract a company's effective tax rate from one and multiply the difference by its cost of debt to calculate its after-tax cost of debt.

<h3>What is After-tax cost?</h3>
  • After-tax cost denotes the actual costs less an amount equal to the combined federal and state income tax savings relating to the deductibility of said costs for federal and state tax purposes in the year in which such costs are incurred.
  • WACC represents a company's average after-tax cost of capital from all sources, including common stock, preferred stock, bonds, and other forms of debt.
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The after-tax cost of debt is 6.28%.

FV = -$1,000

PMT = -$100

N = 20 years

PV = $1,098 before including flotation costs; $1,098×(1-.05) = $1,043.10 after including flotation costs.

Compute I/Y = 9.511%

After-tax cost of debt = 9.511%×(1-.34) = 6.28%

To learn more about After-tax cost, refer to:

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