Rodney, a cash basis taxpayer, owes $40,000 in tax deductible consulting fees for his business.Assume that it is December 28 and that Rodney can avoid any finance charges if he pays theaccounting fees by January 10. Rodney's tax rate this year is 30% and his after-tax rate of return is10%. At what tax rate next year, will Rodney be indifferent between paying the $40,000 this year and next year? Use Exhibit 3.1.

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The Answer of Rodney, a cash basis taxpayer, owes $40,000 in tax deductible consulting fees for his business.Assume that it is December 28 and that Rodney can avoid any finance charges if he pays theaccounting fees by January 10. Rodney's tax rate this year is 30% and his after-tax rate of return is10%. At what tax rate next year, will Rodney be indifferent between paying the $40,000 this year and next year? Use Exhibit 3.1.

Rodney, a Cash Basis Taxpayer, Owes $40,000 in Tax Deductible