Answer:
If Isabel pays the $20,000 bill in December, her after-tax cost would be $12,600 ($20,000 x 0.63). This is because she can deduct the expense on her current year tax return, reducing her taxable income by $20,000 and saving her $7,400 in taxes ($20,000 x 0.37).
If Isabel pays the $20,000 bill in January, her after-tax cost would be $12,740 ($20,000 x 0.638). This is because she would not be able to deduct the expense until the following year, so she would not receive the tax savings until then.
Based on these calculations, Isabel should pay the $20,000 bill in December to minimize her after-tax cost.