1- Alain Mire files a single tax return and has adjusted gross income of $297,00

Question

1- Alain Mire files a single tax return and has adjusted gross income of $297,000. His net investment income is $60,000. What is the additional tax that Alain will pay on his net investment income for the year?

$3,686

Zero

$1,406

None of these

$2,280

2-Assume that Juanita is indifferent between investing in a corporate bond that pays 10.2% interest and a stock with no growth potential that pays a 7.2% dividend yield. Assume that the tax rate on dividends is 15%. What is Juanita's marginal tax rate? (Do not round intermediate computations.)

19.76%

29.88%

40.00%

9.88%

None of these.

3-Jasmine started a new business in the current year. She incurred $28,000 of start-up costs. How much of the start-up costs can be immediately expensed (excluding amounts amortized over 180 months) for the year?

$0

$5,000

$28,000

$2,500

None of these

4-

Assume that Lavonia's marginal tax rate is 20%. If a city of Tampa bond pays 7.6% interest, what interest rate would a corporate bond have to offer for Lavonia to be indifferent between the two bonds?

20.00%

10.60%

9.60%

9.50%.

6.60%

Explanation / Answer

The Net Investment Income Tax is imposed by section 1411 of the Internal Revenue Code. The NIIT applies at a rate of 3.8% to certain net investment incomeof individuals, estates and trusts that have income above the statutory threshold amounts.

Additional tax on net investment income = 60000 x 3.8% = $2280

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