Roger is considering making a $6,000 investment in a venture that its promoter promises will generate immediate tax benefits for him. Roger, who does not anticipate itemizing his deductions, is in the 30% marginal income tax bracket. If the investment is of a type that produces a tax credit of 40% of the amount of the expenditure, by how much will Roger's tax liability decline because of the investment?
A) $0
B) $1,800
C) $2,200
D) $2,400
E) None of the above

Question

Quizplus · Accepted Answer

The tax credit amount would be 40% of $6,000, which is $2,400. This means that Roger's tax liability would decrease by $2,400. Therefore, the correct answer is D.

Roger Is Considering Making a $6,000 Investment in a Venture