21. Juan was considering purchasing an interest in a tax-exempt bond fund for $ 100,000...
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21. Juan was considering purchasing an interest in a tax-exempt bond fund for $ 100,000 when he discovered that the interest must be included on his state income tax return. The interest rate is 5 %. His marginal Federal tax rate is 35%, and his marginal state income tax rate is 10%. Juan itemizes his deductions on his Federal income tax return. As an alternative, Juan can purchase a state bond (a double-exempt bond) yielding 4.9% interest that is exempt from both Federal and state income tax. Which investment would yield the greater after-tax return? 22. Al is single, age 60, and has gross income of $ 140,000. His deductible expenses are as follows: Alimony (divorce finalized in 2017) Charitable contributions Contribution to a traditional IRA Expenses paid on rental property Interest on home mortgage and property taxes on personal residence State income tax $20,000 4,000 5,500 7,500 7,200 2,200 What is Al's AGI? a. $ 94,100. b. $ 103,000. C. $ 107,000. d. $ 127,000. e. None of these
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