Jennifer Winfield recently purchased business equipment that qualifies for a new tax incentive. The new incentive allows Winfield to either expense $100,000 of the cost of the equipment or claim a tax credit of 15% of the cost of the equipment. The cost of the equipment is $200,000. If the credit is elected, the first year depreciation will be $34,000. If Winfield chooses to expense $100,000 of the cost, the first year depreciation will be $20,000 on the remaining cost. Winfield's tax rate is either 32% or 37%. Under what conditions should Winfield elect to take the tax credit? Explain and show any calculations to support your answer.

Question

Quizplus · Accepted Answer

The Answer of Jennifer Winfield recently purchased business equipment that qualifies for a new tax incentive. The new incentive allows Winfield to either expense $100,000 of the cost of the equipment or claim a tax credit of 15% of the cost of the equipment. The cost of the equipment is $200,000. If the credit is elected, the first year depreciation will be $34,000. If Winfield chooses to expense $100,000 of the cost, the first year depreciation will be $20,000 on the remaining cost. Winfield's tax rate is either 32% or 37%. Under what conditions should Winfield elect to take the tax credit? Explain and show any calculations to support your answer.

Jennifer Winfield Recently Purchased Business Equipment That Qualifies for a New