Roger Is Considering Making a $6,000 Investment in a Venture

question 22

Multiple Choice

Roger is considering making a $6,000 investment in a venture that its promoter promises will generate immediate tax benefits for him.Roger, who does not anticipate itemizing his deductions, is in the 30% marginal income tax bracket.If the investment is of a type that produces a tax credit of 40% of the amount of the expenditure, by how much will Roger's tax liability decline because of the investment?

• A)$0
• B)$1,800
• C)$2,200
• D)$2,400
• E)None of these.

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Definitions:

Contract Price

The price agreed upon by the contracting parties as the amount to be paid for the fulfillment of the contract obligations.

Equitable Warranties

Legal promises implied by law that ensure fairness and the truthful disclosure of important information typically in property transactions.

Due-on-sale Warranties

Clauses within a mortgage agreement that require the full loan amount to be repaid if the property is sold.

Express Warranties

Explicit promises made by a seller about the quality, condition, or performance of goods being sold.