Question

Sarah owes a deductible expense that she can pay (and deduct) either this year or next year. She is in the 22% marginal tax rate bracket. Which of the following statements about this payment is/are correct based on marginal tax rate considerations?

Group of answer choices

Deductions should always be taken in the current year. Sarah should pay the expense this year.

If Sarah expects to be in the 32% marginal tax rate bracket next year, she should pay the expense next year.

Both statements are correct.

Neither statement is correct.

Indicate which of these statements concerning the following tax rate structures is/are correct.

Structure 1

When Income Equals	Total Tax Equals
10,000	600
100,000	5,000

Structure 2

When Income Equals	Total Tax Equals
15,000	900
75,000	4,500

Structure 3

When Income Equals	Total Tax Equals
13,000	975
86,000	6,600

1. Tax Structure 1 is proportional.
2. Tax Structure 1 is regressive.
3. Tax Structure 2 is progressive.
4. Tax Structure 3 is progressive.

Answer 1

Deductions should always be taken in the current year. Sarah should pay the expense this year.

If Sarah expects to be in the 32% marginal tax rate bracket next year, she should pay the expense next year.

• Neither statement is correct.

following tax rate structures is/are correct.

• I. Tax Structure 1 is regressive.
• IV. Tax Structure 3 is progressive.