Assuming a 21% marginal tax rate, compute the after-tax cost of the following business expenses.a. $12,300 business meals. b. $42,000 rent on factory equipment. c. $8,050 business entertainment.
What will be an ideal response?
a. $13,592 ($12,300 expense ? $1,845 tax savings from $6,150 deduction).
b. $33,180 ($42,000 expense ? $8,820 tax savings from deduction).
c. $8,050 nondeductible expense.
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