Throughout the textbook, it has been stated that tax relief can come in several

Question

Throughout the textbook, it has been stated that tax relief can come in several forms. Assuming that the taxpayer in question is in a 28% marginal tax rate bracket and the time value of money is 6%, determine the tax value of the following forms of relief: A $2,000 item of income that is excluded from income A $2,000 expenditure that is deductible in computing taxable income A $2,000 expenditure that is eligible for a 10% tax credit d. A $2,000 item of income that is deferred for five years (assume no change in the marginal tax rate.)

Explanation / Answer

A Income 2000 Relief 2000 * 28% 560 Total Value of relief 560/(1.06) 528.30 B Allowance of Expenditure 2000 Relief 2000 * 28% 560 Total Value of relief 560/(1.06) 528.30

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