1. George & Martha are married and file a joint income taxreturn. In 2017 the couple had $…

1. George & Martha are married and file a joint income taxreturn. In 2017 the couple had $ 250,000 of total income and $200,000 in taxable income. a. Calculate George & Martha’sWashington’s 2017 federal income tax liability (USE THE 2017 taxrate schedule in appendix D in your book). b. What is George &Martha’s marginal federal tax rate for 2017? c. What is the George& Martha’s average tax rate for 2017? d. What is the George& Martha’s effective tax rate for 2017? e. George & Marthaare expecting an additional $ 20,000 in income. Which of the aboverates is relevant to them concerning the additional income? Why? 2.John is a single taxpayer. He visits your office for some taxadvice in early December 2017. John forecasted his 2017 taxableincome to be $ 37,000. His 2018 taxable income is forecasted at $45,000. John is felling fortunate and wants to donate $ 6,000 to acharity. The donation will lower his taxable income by $ 6,000 (wewill learn about charitable deductions later this semester). John’sAunt Betsy told him to make the donation before 12/31/17 so he cansave taxes on his 2017 tax return. a. How much 2017 federal incometax will John save by making a 2017 donation? b. Did Aunt Betsygive John good advice? What would your advice be to John about hisplanned donation? 3. Jack & Jill, a married couple filingjointly, have a projected 2017 taxable income of $300,000. Theirneighbor Bob & Betty, also a married couple filing jointly,have a projected 2017 taxable income of $ 66,000. James, a friendto both couples works for a brokerage company specializing inbonds. He asks both couples to consider investing $ 100,000 ineither of the following bonds: • A municipal bond that pays taxfree interest income. 10 year bond paying 6% interest per year, or• An AT&T bond that pays taxable interest income. 10 year bondpaying 8% interest per year. Assume each bond has identical riskand other features. A. Which bond would you recommend to Jack &Jill? Why? B. Which bond would you recommend to Bob & Betty?Why. . . .

 
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