Question

Haru is a self-employed calendar-year taxpayer who made the following cash payments related to his business this year. Calculate the after-tax cost of each payment, assuming Haru has a 37 percent marginal tax rate.

Answer 1

To calculate the after-tax cost of each payment for a self-employed calendar-year taxpayer, multiply each payment by (1 - marginal tax rate).

Step-by-step explanation:

To calculate the after-tax cost of each payment, we need to multiply each payment by (1 - marginal tax rate). In this case, Haru's marginal tax rate is 37%, so the after-tax cost of each payment would be 63% of the original payment.

For example, if a payment is $100, the after-tax cost would be $100 * (1 - 0.37) = $63.

Apply this calculation to each cash payment Haru made to find the after-tax cost.