QuestionQuestion

1.)Liam is a 32 year old single female. She has gross wages of $ 95,000(before deferrals) and $ 18,000
With holding for federal income tax. Given the information below will she likely have too much or too little with held for the current tax year, assuming the following facts? How much?
For simplicity, do not consider AMT.

• She estimates total itemized deductions of $ 9,450
• The standard deduction for a single person is $ 5,450
• The personal exemption for a single person is $ 3,500
• She will not have any interest or dividend income or capital gains
• She will not have contribute to an IRA
• She will defer 5% of her gross salary into the qualified retirement plan .


2.)A client makes a tax-deductible contributions of $ 4,000 to a traditional IRA .The client is in the 25% marginal tax bracket. How much are the approximate tax savings?


3.)A couple has owned and lived in their personal residence for 10 years, They purchased the home for $ 300,000.They sell the home for $ 900,000.How much of the gain is taxable?


4.)A client has asked you to analyze the following investment alternatives for the highest after tax rate of return under the assumption that the client is subject to a 28% marginal federal income tax and a 5% state income tax.

• A corporate bond with a 7% pretax return
• An out of state municipal bond with a 5.75% pretax return
• An in state municipal bond with a 5.5% pretax return


5.) Your financial planner has just completed an analysis of your fixed income holdings. She has determined each of your after tax yields, but is cautioning you that the tax implications of your holdings could change if congress changes marginal tax rates. Based on the following after tax yields, which of these bonds would offer the greatest after tax return if your federal marginal tax bracket increased from 25% to 30%,while your state marginal bracket remained 4.5%.
• A corporate bond with a 5.1% after tax return
• An out of state municipal bond with a 5.0% after tax return
• An in state municipal bond with a 4.8% after tax return

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